Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — HOME DEPARTMENT

The Secretary of State was asked—

Oral Answers to Questions — Prisons (Overcrowding)

Mr. Robin Corbett: When he last visited a prison establishment to discuss overcrowding. [48393]

The Secretary of State for the Home Department (Mr. Jack Straw): We visit prisons to see for ourselves what is happening and to talk to staff, prisoners and members of boards of visitors about matters of concern to them. Issues relating to overcrowding and prison population pressures are frequently raised. Since the general election last year, Ministers in my Department, including me, have made 64 visits to prison establishments, of which I have made nine, the most recent being to the Wetherby young offenders institution on 30 April.

Mr. Corbett: Does my right hon. Friend agree that putting non-violent offenders in prison is often neither the

most cost-effective option nor the most effective prevention of reoffending? How will the Crime and Disorder Bill inspire public confidence in the belief that punishment in the community is both cost-effective and at least as effective as prison in preventing reoffending?

Mr. Straw: My hon. Friend is right to point out that community punishments are significantly less expensive than prison—the average cost of imprisonment is about £25,000 a year, whereas the average cost of a probation order is £2,000. Some so-called non-violent offenders have to be incarcerated because they are persistent offenders, but we are determined to improve the effectiveness of non-custodial sentences through, for example, a national roll-out of tagging and our many reforms to the youth justice system that will ensure that much more offending is nipped in the bud.

Mr. Ian Bruce: The Home Secretary was kind enough to visit the floating facility at Portland—I think that it was his first visit as Home Secretary. What is he doing to ensure that proper training and work programmes are carried out on such emergency facilities? What is he doing about the future of temporary facilities? Will the floating facility be rebuilt, or will it remain for more than the three years that were originally intended?

Mr. Straw: I am happy to meet the hon. Gentleman to discuss the future of HMP Weare if that is convenient. I place on record my thanks for his support for the facility, despite some public opposition, much of which, I understand, has dissolved—people have accepted that the facility is not only good, but has created 200 or 300 extra jobs. We are committed to improving prison regimes. The House may be aware that we are spending £1.5 million on a pilot to ensure that welfare-to-work facilities are available in prisons before offenders leave.

Mr. Peter L. Pike: My right hon. Friend will know that there have been too many suicides in prison,


particularly in Preston prison. Does he believe that one reason for that is overcrowding? If so, it is essential that we solve that problem as soon as possible.

Mr. Straw: We are all profoundly concerned about the incidence of suicide in prison, which is significantly higher than in the equivalent age group outside prison. However, the number of suicides among young males is, sadly, rising in the population as a whole. I do not believe that there is evidence that overcrowding—prisoners being held two to a cell—is a cause of suicide. Indeed, many of those who are deemed to be at risk of committing suicide are put with another prisoner in the hope that the risk will be reduced. The Minister responsible for prisons, the Director General of the Prison Service and the whole of the service are taking every possible step to ensure—through counselling, for example—that the risk of suicide is reduced.

Oral Answers to Questions — Crimes Against the Person

Mr. David Amess: What recent representations he has received on the level of crimes against the person in the United Kingdom. [48394]

The Minister of State, Home Office (Mr. Alun Michael): Not surprisingly, we regularly receive representations on the level of crimes against the person, often from Members of Parliament in relation to experience in their constituency, but as far as I am aware we have received none from the hon. Gentleman.

Mr. Amess: Will the Minister join me in congratulating the police and others on their efforts to detect and combat crime and in particular on their support for closed circuit television? If he will, how can it be right that, last year, Labour attacked the Conservative Government for not approving the CCTV bid in Southend, yet this year, when Southend borough council, which consists of the Labour party and its Liberal friends, put in a similar bid, the Labour Government rejected it?

Mr. Michael: As I said in my first reply, I welcome the hon. Gentleman's new-found interest in the issue. The Government have got on with the task and given the weapons to the police, in partnership with local bodies, to enable them to tackle crime and disorder, including violence against the person. I hope that they will have the hon. Gentleman's support in that.

Mr. David Winnick: Will my hon. Friend join me in condemning the horrifying murders of three young children in Northern Ireland, who were done to death for no other reason than sectarianism? Will he take this opportunity to extend the sympathy of the whole House to the parents and the closest relatives of those who were murdered over the weekend? Is it not horrifying that, despite the Good Friday agreement, some people in Northern Ireland still want to use the terrible, murderous methods against innocent people, in this case young children, that were witnessed in the former Yugoslavia and elsewhere? Let us condemn these terrible murders and demonstrate the fact that we are on the side of the overwhelming majority of people in Northern Ireland, who also condemn what has occurred.

Mr. Michael: Nothing is more effective than the death of children in concentrating people's minds on the horror

of violence, wherever it occurs. I certainly share my hon. Friend's view that it should give cause for thought to anyone who wants to continue the atmosphere of conflict. There is nothing in the situation of children of the ages of those who died that can possibly justify what has taken place. Everyone should pause for thought before doing anything that could encourage the continuation of such mindless violence.

Sir Norman Fowler: I associate myself and my party entirely with what the hon. Member for Walsall, North (Mr. Winnick) and the Minister said, but I want to ask about another specific area of crimes against the person: football hooliganism. Does the Minister agree that, if the world cup competition is to be, staged here, we need to convince everyone that everything possible is being done to eliminate hooliganism? Will the Home Office consider setting up an independent group to investigate what improvements can be made and whether any changes will require legislation?

Mr. Michael: No one has taken more interest in that topic than my right hon. Friend the Home Secretary. He has had the support of all parties in the House as well as the co-operation of the authorities in France in doing all that we can to tackle the problem and keep to a minimum any contribution that is made by English hooligans to the violence that has so disgraced us over recent months. I know that he intends to consider how to ensure that all possible measures are in place and that he wants to work with the Football Association to find the best way of making the maximum contribution, including through co-operation across the Floor of the House.

Oral Answers to Questions — Penal System

Mr. Derek Wyatt: If he will make a statement on the Government's plans for the penal system. [48395]

The Secretary of State for the Home Department (Mr. Jack Straw): Serious, dangerous and persistent offenders should be sent to prison and should be subject to constructive regimes in a secure and well managed environment. Prison may not, however, be the most effective option for less serious offenders. Our priorities are tough punishment in custody and in the community in ways that carry public confidence and reduce offending. We are looking at options for closer and more integrated working between the Prison Service and probation services.

Mr. Wyatt: I thank my right hon. Friend for that reply. Does he agree that community punishment needs the confidence of the community?

Mr. Straw: Yes.

Sir Sydney Chapman: Does the Home Secretary agree that detection and prosecution of those who commit crimes is of paramount importance, along with deterrence? Can he assure the House that there will be the closest possible co-operation between the police, the Crown Prosecution Service and the courts in tackling crime?

Mr. Straw: I would like to give that assurance, and to say that over the past 15 months, the Attorney-General,


the Lord Chancellor and I have worked hard to bring about closer collaboration between the police, the CPS and the courts and to set up joint planning arrangements. My right hon. and learned Friend the Attorney-General recently published the results of the Glidewell inquiry, which should ensure major reforms in how the CPS relates to the police, including the establishment of coterminous boundaries.

Oral Answers to Questions — Illegal Immigration (Smuggling)

Mr. Barry Sheerman: What steps he is taking to tackle the international crime syndicates currently involved in smuggling illegal immigrants into the United Kingdom. [48396]

The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): People trafficking is getting more sophisticated, but so is the Government's response. We have set up the organised immigration crime section at the National Criminal Intelligence Service to tackle the problem. The unit targets the criminal networks involved and is helping in the development of a more proactive, intelligence-led approach to combating the problem. We are also creating better international co-operation with European and transatlantic partners. Several countries face this problem, and we need to work together on it.

Mr. Sheerman: I understand that a report from the immigration service highlights the true number of illegal immigrants entering the country and suggests that immigration has accelerated in recent years. Does my hon. Friend agree that it is galling for constituents, who may wait for years for a loved member of their family to join them, to see illegal immigrants arriving and little action being taken? Does he agree that high levels of illegal immigration spawn crime and add to the cycle of exploitation?

Mr. O'Brien: I agree with every word my hon. Friend said. Many people, particularly in ethnic minority communities, are outraged at abuse of the asylum system and illegal immigration. We are determined to tackle the people-traffickers who make vast amounts of money from illegal immigration. We will disrupt what they are doing and will prosecute wherever possible. Today, I have published a consultation paper on the appeals system, which we are trying to sort out. Shortly, we shall publish a White Paper showing how we can create a fairer, firmer and faster system of immigration control.

Mr. Nicholas Soames: No one should underestimate the Minister's difficulty in trying to make the system more effective. Is he aware that many of those who work in the immigration service are appalled at being unable to cope with the rising tide of illegal immigration and at finding themselves having to let go people whom they know to be illegal immigrants who are never again found? Does he agree that this problem should be a first charge on the Government's time? Will he do all he can to bring order to the current chaos?

Mr. O'Brien: I agree that the system that we inherited from the previous Government was a shambles. They did not put in place the resources or facilities necessary to

ensure proper immigration control. We want to put them in place. That is why we have had a complete review of how the immigration and asylum system operates. We will publish the outcome soon and deliver what the Government of which the hon. Gentleman was a member never delivered—firm and fair immigration controls.

Oral Answers to Questions — Restorative Justice

Fiona Mactaggart: What progress has been made on extending restorative justice to new police areas. [48397]

The Minister of State, Home Office (Mr. Alun Michael): In recent weeks I have seen work demonstrating the value of restorative justice in Northampton, Gwent and the Thames valley, which has made young offenders face up to the injury they cause others. The reparation order and other measures in the Crime and Disorder Bill, with proposals for reform of the youth court, incorporate restorative justice principles, and will lead to a major extension of restorative justice.

Fiona Mactaggart: My hon. Friend will no doubt be aware of research from the system operating in the Thames valley that suggests that the reoffending rate among young people with whom it deals is about 3 per cent., compared with 30 per cent. nationally. However, my hon. Friend may not be aware of the anxiety expressed by several officers participating in the scheme that, if untrained officers use this robust method of forcing young people to confront their wrongdoing, it might be damaging and lead to quite frightening results in some areas. In the face of a large expansion of the scheme, what resources will be devoted to ensuring that every police area operates the scheme as excellently as it is being operated in the Thames valley?

Mr. Michael: I agree with my hon. Friend that training and preparation are necessary. The benefits are obvious both to the victim, who often feels that he or she has been able to confront offenders with their damaging behaviour, and to young offenders, who often do not realise that they are damaging other people through their burglary, theft or car crime. We are offering guidance and support to ensure proper training and preparation locally and partnership and co-operation among a variety of organisations, not just the police.

Oral Answers to Questions — Refugees

Mr. John Wilkinson: If he will list the proposed changes to the Dublin convention on the treatment of refugees which he has made to the European Union. [48398]

The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): On 29 May, member states agreed a series of measures—including a comprehensive programme of action put forward by the British presidency—designed to improve the practical operation of the Dublin convention. Our measures address


both the difficulties of establishing responsibility for asylum seekers who are undocumented and the need for better co-operation and liaison between member countries.

Mr. Wilkinson: While it is laudable that the Government have followed the excellent example of the previous Conservative Administration and extended the Immigration (Carriers' Liability) Act 1987 to international train operators who run services through the channel tunnel, why have Her Majesty's Government not been able to prevail on the French—France is a signatory to the Schengen convention—to make the channel tunnel carriers' liability order apply to SNCF train services? The Belgians comply, so why not the French?

Mr. O'Brien: Some legal defects in the treaty make it difficult to extend. However, we have had discussions with the French—and received much co-operation from the French Government as a result of the intervention of my right hon. Friend the Home Secretary—to ensure that we reduce the number of refugees who enter the country from Paris. It is correct to say that there are practical difficulties, but we are receiving the co-operation of the French in seeking to resolve them.

Mr. James Clappison: The Minister chose to refer to the Government's review of asylum and immigration appeals in his answer to my hon. Friend the Member for Mid-Sussex (Mr. Soames). Can he tell us a little about the background to that review? Do the Government acknowledge the problem caused by the increased number of such cases? Does not the Government's proposed single right of appeal amount to an extension of the principle behind the so-called white list cases, which Labour opposed in opposition? Will the Minister say specifically whether, in initiating the review, the Government are paving the way for some form of general amnesty for asylum seekers?

Mr. O'Brien: The white list has little or nothing to do with the Dublin convention or the other issues that we have discussed. We have made it perfectly clear that we do not intend to have a blanket amnesty; we have given that reassurance on many occasions. However, I draw the hon. Gentleman's attention to the previous Government's actions in 1993, when more than 50 per cent. of exceptional leave to remain cases were granted the right to stay in a one-off process. It ill becomes the hon. Gentleman to start talking about amnesties now.

Mr. Neil Gerrard: Does my hon. Friend accept that there are 10,000 outstanding cases that predate the Asylum and Immigration Appeals Act 1993? We inherited that problem, the Dublin convention and the difficulties of dealing with undocumented asylum seekers. Will my hon. Friend assure the House that he will see what he can do to deal with that backlog, so that those who have waited for years may finally receive a fair decision on their cases?

Mr. O'Brien: My hon. Friend is right; the Dublin convention and the pre-1993 backlog are another fine mess that the Conservatives left the country in. We will clean it up as fast as we can, but the Tories left us quite a mess.

Oral Answers to Questions — Minimum Sentences (Burglary)

Mr. John Bercow: When resources will be available to implement mandatory minimum sentences for burglars convicted of a third offence as set out in section 4 of the Crime (Sentences) Act 1997. [48402]

The Minister of State, Home Office (Mr. Alun Michael): On the time scale set down by the Conservatives in government, when they passed this legislation with our support.

Mr. Bercow: I thank the Minister for that answer. Will he confirm that the average sentence for someone convicted of a seventh burglary is less than 20 months? Does he find that acceptable? If not, will he say why he and the Government continue to oppose mandatory minimum sentences, given that the courts refuse to use the powers at their disposal to impose long enough sentences on repeat burglars?

Mr. Michael: As usual, the hon. Gentleman constructs something to criticise while disregarding accuracy. The Government have not opposed mandatory minimum sentences; we have introduced two. He should ask why no date for implementation was set by the Conservative Government.

Mr. Ross Cranston: Is not this point a bit rich coming from the Conservative party when burglary increased by more than 120 per cent. in the 18 years after 1979? It is a cardinal principle of our system that people should be subjected only to penalties that are commensurate with the circumstances of the crime, taking into account the victim's circumstances and the impact on the victim's family, for example. Should not we move away from that principle only where there are compelling circumstances, such as protection of the public?

Mr. Michael: Yes, my hon. Friend is right. It is also a bit rich for Conservative Members to squander money that they did not provide for in their period in office, with all the irresponsibility that they seem to have adopted since the general election.

Oral Answers to Questions — Parliamentary Elections

Mr. Nick St. Aubyn: What assessment his Department has made of the benefits of the present system of elections to the House. [48403]

The Secretary of State for the Home Department (Mr. Jack Straw): In the debate on the European Parliamentary Elections Bill, and more recently in the opposition day debate on 2 June initiated by the right hon. Member for Devizes (Mr. Ancram), I spelled out, among other things, the benefits of the present system. The independent commission on the voting system has been established to find the most suitable alternative to the current system. The characteristics of the present system are well known to all hon. Members, many of whom spoke eloquently about them in the 2 June debate. In view of that, it would be an impertinence for my Department to provide the House with a separate assessment.

Mr. St. Aubyn: Does the Home Secretary agree that at least half of hon. Members favour retaining the present


system of election to this House, that the system is both proportionate and representative, and that it is unfair that the commission under the auspices of Lord Jenkins of Hillhead does not properly represent the views of those in favour of retaining the first-past-the-post system?

Mr. Straw: I cannot speak for the exact number of right hon. and hon. Members on either side of the House who support the current system, but it is certainly quite substantial. Given his support for first past the post, the hon. Gentleman makes a grave error in asserting that the first past the post should be put to the independent commission of inquiry. We have sought an independent inquiry into the alternatives. There will be a referendum in due course whereby the British people, as they should, will themselves have the right to decide between the present system and a very specific alternative.

Mrs. Gwyneth Dunwoody: Is my right hon. Friend aware that many of us would have far more confidence in that suggestion if it were clear that the first-past-the-post system were to be part of any referendum? I have to tell him that some of us might feel far happier if the work on the alternative system were not in the hands of someone who has always demonstrated his inability to do anything correct at any time.

Mr. Straw: I give my hon. Friend the assurance she seeks: that first past the post will be one of the clear choices on any ballot paper in a referendum on voting systems.

Mr. A. J. Beith: Is it not the case that, without the assistance of the Home Office, it is fairly easy to obtain the details of how often the present electoral system has produced results that are wildly at variance with the votes cast? As that is not one of the primary objectives of an electoral system, is it not sensible of the Government to establish a commission to determine what alternative can be put up against the present system in a referendum? Can the Home Secretary understand why some hon. Members appear to be so worried by the possibility that the British people will be able to decide whether they prefer the present system or a proportional one?

Mr. Straw: Home Office records also record the full-hearted support of the Liberal party for first past the post until 1923—when it slipped from being the second party with a prospect of power to a minority party.

Mr. Tom Levitt: Is my right hon. Friend aware that there are barely a dozen Opposition Members who have the support of more than 50 per cent. of those who voted in their constituency on 1 May last year? A far higher proportion of Labour Members have the support of 50 per cent. of their electorate. Will my right hon. Friend assure the House that the commission will consider not only proportional representation, but other systems such as the alternative vote?

Mr. Straw: The Jenkins commission's terms of reference have been widely drawn so that it can, if it wishes, consider the alternative vote. It became clear in the debate on 2 June that there is widespread feeling on both sides of the House that if the issue of proportionality

is to be properly examined, we should look not only at proportionality between votes cast and seats obtained, but at proportionality between votes cast, seats gained and power secured.

Sir Norman Fowler: As one of those Members of Parliament with more than 50 per cent. of the vote, let me ask the Home Secretary whether it is becoming clear that more and more sensible people now support retaining the constituency system and first past the post? Liberal opposition only underlines my point. The right hon. Gentleman has to answer why the Jenkins commission was not asked to evaluate and to put the evidence on all electoral systems, including the present one, but was asked simply to try to find alternatives to the present system. Would it not have been much better to have an evaluation of all the systems, including the present one, which we know the right hon. Gentleman supports?

Mr. Straw: We discussed that matter at great length in our debate on 2 June—

Sir Norman Fowler: And we will again.

Mr. Straw: —and we will again. However, from his position of strong support for first past the post, the right hon. Gentleman is making a grave error in suggesting that first past the post ought to go to the commission. We want—I should have thought that it would also be in his interests—the electorate to be offered a clear choice between the present system of first past the post and an alternative that will be drawn from the recommendations of the Jenkins commission. That seems to me to be the best way of—at long last—securing legitimacy either for the current system or for an alternative. All of us, whatever our point of view, ought to have confidence in the British people's ability to make the final choice.

Mr. Stephen Twigg: Is my right hon. Friend aware that, when Lord Jenkins met Members of Parliament from all parties two weeks ago, both supporters and opponents of electoral reform united in agreeing the importance of a programme of public information in the run-up to a referendum? Whatever system Lord Jenkins and his colleagues come up with will require a programme of clear public information so that voters can make an informed choice in the referendum. What plans does the Home Office have to ensure that such a public information programme is organised?

Mr. Straw: I accept that there will be a need for a public information programme, but already the word of our debates on the various alternatives that are on offer for European elections has travelled so far and so fast that in the centre of Blackburn I am frequently assailed about the divisors laid down under the d'Hondt and Sainte-Lague systems.

Oral Answers to Questions — Prisons (Drug Use)

Mr. Howard Flight: If he will make a statement on the number of prisoners taking drugs. [48404]

The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): Although mandatory drug testing cannot be a complete measure of the prevalence of drug misuse in prisons, it gives the best estimate of the number of prisoners using illegal drugs. In 1997–98, 20.8 per cent. of random samples tested positive for drugs.

Mr. Flight: Does the Minister view that as a serious problem, and does he feel that there is a need for more than random sampling? What measures, if any, do the Government have to address the problem?

Mr. Howarth: I am sure that the hon. Gentleman will be pleased to hear that at Ford open prison, which is in his constituency, the figure decreased from 17 per cent. in 1996–97 to 10 per cent. in 1997–98, which reflects a great improvement.
In April, the Prison Service issued a new strategy document, "Tackling Drug Misuse in Prisons", which advocates a new strategy in three areas: first, reducing the supply of drugs into prisons; secondly, reducing the demand for drugs and rehabilitating drug misusers; and thirdly, reducing the potential for damage to health. Drug misuse is a serious problem, which is why we conducted a review that led to the new strategy. I assure the hon. Gentleman that we take the problem very seriously and will continue to work hard to deal with it.

Helen Jones: My hon. Friend will be aware, because he is my near neighbour, of the drug problem in north-west prisons. Will he join me in congratulating the officers and nurses at HMP Risley in my constituency on their work in setting up a detox unit in the prison which has finally received funding from the Prison Service? Does he agree that such initiatives are the way to tackle drugs in prisons and drug-related crime because they ensure that prisoners who enter prison addicted to drugs have at least some chance of being drug-free when they leave?

Mr. Howarth: I congratulate the prison staff at Risley on their work. It is important that we understand that the problem is declining. In 1996–97, 24.4 per cent. of mandatory drug tests were positive. That figure fell to 20.8 per cent. in 1997–98. Prisons take a number of different approaches, including detox, and all of them have a part to play. We are determined that, over time, any reasonable approach should be tested and, where appropriate, applied in the prison system.

Sir Norman Fowler: Nevertheless, does the Minister agree that we face a massive drugs problem in prisons? What extra measures is he taking to detect drug users and drug pushers in prisons? Above all, what is he doing to implement the chief inspector of prisons' proposals to prevent drugs getting into prisons in the first place?

Mr. Howarth: There are a number of measures. One of the ways of detecting drugs going into prisons is increased use of sniffer dogs. That programme is being developed. There are also good examples of strong warnings being issued to visitors to prisons. Several measures are being taken across the Prison Service, but we are not being complacent. The right hon. Gentleman

shakes his head without having heard the answer. We recognise that the bulk of drugs that come into prisons are brought in by visitors. The police and the Prison Service work closely together to intercept such visitors and serious action is taken against them. We are doing a great deal, but more can be done and we shall take whatever action is necessary.

Oral Answers to Questions — Electronic Tagging

Mr. Tom Cox: What assessment he has made of the pilot tagging schemes. [48405]

The Secretary of State for the Home Department (Mr. Jack Straw): Research into the first two years of the pilot schemes of curfew orders enforced by electronic monitoring under the Criminal Justice Act 1991 has been published as a Home Office research study. The study indicates that the technology works—which is just as well—and that over 80 per cent. of orders were successfully completed. Further, more detailed research is being undertaken.

Mr. Cox: While I note my right hon. Friend's reply, does he agree that, as the scheme is developed and the proper supervision and safeguards are put in place, we should welcome it as an alternative to prison? At what age can a person be electronically tagged?

Mr. Straw: I am grateful for my hon. Friend's welcome for the measure. It is certainly an appropriate alternative to prison for some offenders, not least because of the cost, which is less than £2,000 per order, compared with some £25,000 a year for a period of imprisonment. My hon. Friend asked at what age a person can be electronically tagged. We are piloting the use of electronic monitoring tags for 10 to 15-year-olds and, so far, 10 orders have been issued in respect of juveniles.

Miss Julie Kirkbride: I was struck by the Home Secretary's comment that 80 per cent. of cases were deemed to be successful. Can he explain what happened in the other 20 per cent. of cases, so that the House might know what went wrong?

Mr. Straw: They were unsuccessful. Since the hon. Lady asks, of 973 sentences that were completed, 163 were revoked. If an offender breaks the conditions of the electronic monitoring, he or she is taken back to court and, typically, will be sent to prison.

Oral Answers to Questions — Arrested Suspects (Drug Use)

Mr. Ken Purchase: What proportion of people arrested by the police are addicted to heroin and other opiates. [48406]

The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): The information that my hon. Friend seeks is not centrally available. However, a recent Home Office study on drug misuse by samples of people arrested in five cities showed that 18 per cent. tested positive for opiates; 11 per cent. admitted dependency on heroin; and a further six per cent. admitted dependency on methadone.

Mr. Purchase: Those are alarming figures, despite the fact that they are not as highly refined as the Minister


would like them to be. Will he undertake to oppose the legalisation of heroin and other opiates, not least because that might encourage international profit-seeking pharmaceutical companies to divert production into ever more expensive, highly addictive designer drugs, and those with personality disorders may be pushed into crime in order to afford the ever escalating cost of their fixes?

Mr. Howarth: I agree entirely with my hon. Friend. The only certain result of legalising—or, rather, decriminalising—currently illegal drugs is that more people would use them. My hon. Friend is right to say that the companies that manufacture such drugs would inevitably spend large sums in aggressively marketing them and targeting a younger audience.
My hon. Friend is also right about so-called "designer drugs". I wish to make a simple point with which the whole House will agree: young people should not be deceived into believing that something labelled a designer drug is safe. All the evidence is that the results of individual cases are totally unpredictable. We have seen far too many examples of young people believing that it is safe to take one designer drug or another, sometimes with tragic consequences. No drug is safe. The only safe way to proceed is not to take drugs.

Mr. Humfrey Malins: Does the Minister accept that at least 50 per cent. of those who appear in court charged with domestic burglary are drug addicts who burgle to feed their habit? Does not that figure show that it is a critical problem in our criminal justice system, which is why it is important to ensure that firm treatment is available to deal with those people, particularly in prison? Will he couple that with his aim to make prisons drug-free zones?

Mr. Howarth: The hon. Gentleman raised his latter point ingeniously on the back of the question, but it is a fair point. The statistics that he quoted—court figures, showing that about 55 per cent. of those convicted of certain types of offences had committed the offence in circumstances that were drug-related—broadly bear out the Home Office research I mentioned, which shows that about two thirds of arrestees for acquisitive crimes are found to have been involved in drugs.
The links between drugs and, especially, acquisitive crime are now so firm that no one can doubt them. It is important that we act as decisively as possible; that is why, in the Crime and Disorder Bill, we are giving the courts the option of making a drug testing and treatment order. That will not be a soft option, but it will give courts the ability to catch those cases and, in suitable instances, to say to the offender, "You need treatment, but we shall not let you pretend that that is happening when it is not, so there will need to be proper testing to ensure that the treatment is going ahead." That is a good step forward, which has widespread support. I believe that it shows how determined we are to tackle that serious problem.

Oral Answers to Questions — Fire and Police Service Pensions

Mr. Nigel Beard: What plans he has to change fire and police pension arrangements. [48408]

The Minister of State, Home Office (Mr. Alun Michael): On 31 March, we published consultation documents on the police and fire service pension schemes. We have invited comments on those consultation documents by the end of July. We shall listen carefully to the comments that we receive, in considering changes to the pension arrangements for new entrants to the police and fire services and to medical retirement procedures.

Mr. Beard: I thank my hon. Friend for that reply. Does he recall that proposals for closing Shooters Hill fire station, which covers part of my constituency, arose out of difficulties in financing the London fire brigade's pension funds? Will he ensure that, in any future arrangements that are made, pension fund arrangements do not influence the strength or disposition of fire services or police services in any part of London?

Mr. Michael: My hon. Friend makes a serious point, and I can understand the difficulty that confronts people when local decisions have an impact on the local community. However, there is no magic wand for dealing with the burden of pensions. It would cost about £30 billion to provide a fully funded pension scheme for the police and the fire service, and I suspect that hon. Members on both sides of the House would have other priorities for such sums of money.
There are vast variations in the extent to which ill health retirement pensions act as a drain on the resources of both the police and the fire service. That problem will not go away; it requires good management of the available resources and careful consideration of the options set out in our consultation papers.

Mr. John Greenway: Does the Minister agree with the Police Federation and the Fire Brigades Union that it would be unacceptable for two police officers or firefighters, together killed or seriously injured in the line of duty, to have different entitlements to injury benefit, or for the widow and family of one to be paid less pension and other benefits than the family of the other? Notwithstanding the need to review the police and fire service pension schemes, that view is common to both sides of the House, and there is cross-party agreement, especially on the need to eliminate abuse in the area of ill health, which the Minister mentioned.
Does the Minister agree that the dangers faced every day by policemen and firefighters demand and deserve special consideration? The public would find it very difficult to understand it if, when such a tragedy occurred, the widow or family of one had less benefit entitlement than the other. Will he please bear that in mind in his review?

Mr. Michael: I shall certainly bear in mind the points that the hon. Gentleman makes when we consider the outcome of the review. I believe that all hon. Members would accept that police officers and firefighters place themselves in danger in order to protect the public; that is why their schemes are more generous than other pension schemes. I make the point gently, however, that, after the Sheehy report was published, it was the Conservative party that started the differentials between people serving together in different areas. Those differentials are among the difficult issues that must be tackled. If changes are desirable, they cannot be made for those already serving.


Consequently, if one were to accept the logic of what the hon. Gentleman says, one might be trapped in a situation where no changes were ever made.

Mr. Lawrie Quinn: Does my hon. Friend agree that, in areas such as North Yorkshire, where both the police authority and the fire authority have particular problems of sparsity because of the large geographical area and the limited manpower available to them, special consideration must be given to the management problems that those authorities face, to which my hon. Friend referred earlier?

Mr. Michael: The impact on individual forces is set out and considered in the formula that applies to police forces and the fire service. Sparsity is identified as a major complication by police forces and fire services covering rural areas. That is why I have commissioned research into the impact of sparsity, to see whether that can be evaluated. We may have more to say when we see the outcome of that research.

Oral Answers to Questions — Community Safety Audits

Angela Smith: What assessment he has made of the community safety audits undertaken to date by local authorities. [48409]

The Minister of State, Home Office (Ms Joyce Quin): The extent to which that work is already under way varies significantly around the country, and we have not so far made any formal assessment, although the results of local authority association surveys have been published and are a useful guide. We are aware of many examples of good practice around the country. The Crime and Disorder Bill will ensure that the benefits of an audit-based approach to tackling local crime problems are available to communities throughout the country.

Angela Smith: I draw my hon. Friend's attention to the fact that much work on audit and other aspects has already been done by local authorities, including my own in Basildon, without any support or encouragement from the previous Government. The support, encouragement and legislation from this Government have been widely welcomed. Will my hon. Friend ensure that the work already undertaken is used as an example of best practice by local authorities that are just getting off the starting blocks?

Ms Quin: Indeed, we want to build on the good work that has been done in various parts of the country. I am happy to join my hon. Friend in paying tribute to the work done in her area, Basildon. I should also mention the geographic information system developed by the safer Merseyside partnership and Salford's community safety profiles scheme. The point of our legislation is to support local authorities in such work. My hon. Friend is right to say that the previous Government set their face against requiring local authorities to undertake those responsibilities.

Oral Answers to Questions — Tote

Mr. David Heath: If he will make a statement on his policy in relation to the future of the Tote. [48411]

The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): A review of the scope for greater private sector involvement in the Tote is already under way. Before any final decisions are arrived at, we will take full account of a recent internal review undertaken by its chairman, as well as the likely commercial impact of any changes on the Tote, the needs of gambling regulation and the health of horse racing.

Mr. Heath: Before the annual meeting of the Tote tomorrow, and in view of the statements of some privateers and the Treasury, can the Minister explain to the House, first, how the Government will sell something that they arguably do not own; secondly, how he will maintain the integrity of pool betting; and thirdly, how he will ensure that the essential revenue coming from the Tote is maintained, given the parlous state of the horse racing industry?

Mr. Howarth: All the hon. Gentleman's questions fall within the scope of my earlier point that we are concerned about the health of the horse racing industry. My right hon. Friend the Home Secretary will speak at the Tote lunch tomorrow. Perhaps the hon. Gentleman can curb his enthusiasm and wait to hear what my right hon. Friend says. The terms of reference of the review are sufficiently wide to take properly into account the hon. Gentleman's concerns, which we should all share.

Oral Answers to Questions — Lighter Refill Sales (Young People)

Mr. David Hanson: When he expects to reach a conclusion following the consultation on the banning of butane gas lighter refill sales to under 16-year-olds.[48412]

The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): Depending on the results of the consultation, which we are currently undertaking, we hope to be able to reach a decision in principle at the end of the summer.

Mr. Hanson: How many young people die as a result of the misuse of butane gas lighter refills? Does my hon. Friend accept that there is widespread support among local authorities, trading standards departments, charities, parents and many others for the banning of the sale of butane gas lighter refills to under 16-year-olds, which would be a positive move by the Government?

Mr. O'Brien: The latest figures come from data collected by St. George's Hospital medical school for the Department of Health. They show that 75 deaths in the United Kingdom in 1996 were associated with volatile substance misuse. Gas fuels, usually in the form of gas lighter refills, were involved in 60 per cent. of those deaths. I do not want to prejudge the results of the consultation, but, as my hon. Friend said, there is widespread concern in the country about this issue, and I pay tribute to him for his work in raising and seeking to tackle it.

Miss Anne McIntosh: Would the Minister support a move to introduce voluntary identity cards to enable retailers to judge whether people are aged under 16? Following my local campaign, such cards have the support of North Yorkshire county council.

Mr. O'Brien: The Portman group is already putting forward its proposals, and we have broadly accepted them in a certain context. The issue is whether we can extend them to deal with those matters to tackle the sale of such substances in shops.

Oral Answers to Questions — Metropolitan Police

Sir Sydney Chapman: If he will make a statement on the latest manpower and funding levels of the Metropolitan police. [48413]

The Secretary of State for the Home Department (Mr. Jack Straw): The 1998–99 settlement for the Metropolitan police service provides a spending capacity of £1.775 billion, in line with the national average for police authorities in England and Wales. Police strength in the Metropolitan police at May 1998 was 26,585 officers. The Commissioner tells me that it is recruiting and plans to end the financial year with about 26,750 officers and 13,377 civilians.

Sir Sydney Chapman: Although I appreciate the modest increases in the funding and the manpower of the Metropolitan police, does the Home Secretary agree that they are almost being negated because the alarming and increasing amount that is being apportioned to police pensions—a matter which was taken up by the hon. Member for Bexleyheath and Crayford (Mr. Beard)—has to be met? Does he also agree that that alarming increase is affecting the provision of services at the sharp end? I understand absolutely that this is a long-standing problem which certainly cannot be laid at the door of this Government, but will the Minister look to some way, especially in the review and consultation, of disentangling the cost of police pensions from the provision of services at the sharp end of the Metropolitan police?

Mr. Straw: I accept what the hon. Gentleman says about the impact of the cost of the police pension scheme on police services generally. That point also applies to the fire service. Part of the problem has been the unacceptably high proportion of officers whom chief officers of police have allowed to retire early on grounds that are not acceptable, as the Audit Commission and hon. Members on both sides of the House accept.
The variation is extraordinary: at one end of the scale, only 17 per cent. of officers have been allowed to retire early in Kent constabulary; at the other end, 77 per cent. of officers in Merseyside have been retiring early. That suggests a lack of effective management control of the numbers who are retiring early. We have increased police budgets this year, nationally and also for the Metropolitan police, of 3.7 per cent. We look to chief officers of police

to make the same kind of efficiencies as other sectors of the public services, which were subjected to such efficiencies relentlessly—and, in my judgment, quite rightly—by the previous Government.

Mr. Bill O'Brien: Will my right hon. Friend, who has referred to the resources given to the Metropolitan police, explain a situation that develops in some of the regions? Is there the same effect on the Metropolitan police as there is in some of the regions? Band D taxes meant that we had a reduction of £6 million for police services in West Yorkshire. Does the same apply right across the board, and does that include the Metropolitan police?

Mr. Straw: The system by which police authorities set a precept is broadly similar across the country and has, for the current year, as for many previous years, been the subject of capping. Within totals of grant and standard spending assessment, which are set by central Government, each police authority has a fair degree of flexibility about the overall amount that it desires to set and to spend on its police service.

Oral Answers to Questions — Hooliganism (World Cup)

Mr. Peter L. Pike: What further sanctions people convicted of causing trouble at this year's world cup face under British law. [48415]

The Minister of State, Home Office (Mr. Alun Michael): An Order in Council came into effect on 1 June which allows the courts in England and Wales to impose restriction orders on those convicted of football-related offences in France. We shall examine the circumstances of each conviction to see whether there are lessons to be learnt in respect of restriction orders.

Mr. Pike: Is it not important that we take every possible step to ensure that the small minority of hooligans who do such damage to the name of football and to the name of England are not allowed ever to get away with it again?

Mr. Michael: I certainly agree with my hon. Friend, although as a Welshman perhaps I should not say too much about the name of England. It is greatly to be welcomed that agreement was reached with France before the world cup finals, so that the order could come into effect on 1 June. The restriction order power is operable if we have an agreement with the country and an order has been made under the Football Spectators Act 1989.

Mr. A. J. Beith: How many of the people who were arrested in France have been charged with an offence?

Mr. Michael: None so far, because, so far as I am aware, none have been released. The matter will have to be considered on their return to this country.

Opposition Day

[17TH ALLOTTED DAY]

Manufacturing and Industrial Relations

Madam Speaker: We now come to the Opposition motion on manufacturing and industrial relations. I have selected the amendment in the name of the Prime Minister.

Mr. John Redwood: I beg to move,
That this House views with alarm the Government's creation of a boom and bust economy in the UK, with industry being badly damaged by high sterling and rising interest rates whilst wage and price inflation accelerates; expresses concern at the growth of industrial unrest in several sectors of the economy; and urges the Government to rethink its approach both to manufacturing and employee relations before more damage is done.
"Business confidence hits five-year low": today's business headline in the Financial Times and other leading newspapers says it all. The Government are creating a them and us economy: a booming economy for the Government, their advisers and their lobbyists; a bust economy for people who dare to make things or try to sell abroad.
The Government proudly tell us that they have been elected to stop the trade cycle. The President of the Board of Trade is as likely to stop the trade cycle as I am to find a regular tube service on the Central line today. The Government stand Canute-like on the edge of a manufacturing recession claiming that the tide of lost jobs and closed factories is not coming in or has nothing to do with them, while the rest of us see the waves that they have generated enveloping British industry in closures and depression.
When we last debated these matters, the President of the Board of Trade told the House that the Government were to establish a competitive and stable exchange rate. She refused to recognise that, with the pound at its present level, it cannot be both. I confess that there has been more stability recently, but stability of the pound at around DM3 means more stability in the level of pain to manufacturers; more stability in the level of pain and difficulty for those seeking to export; and more stability in the terrible loss of jobs and loss of orders that now afflict our manufacturing heartlands.
It has certainly meant more job losses announced in steel, engineering and textiles. It has meant more job losses in the manufacturing heartlands of the north and the midlands. I hope that Labour Members will, for once, speak up about the fears and worries of their constituents. Many Labour Members represent those heartlands.

Mr. Barry Sheerman: Will the right hon. Gentleman give way?

Mr. Redwood: I hope that the hon. Member for Huddersfield (Mr. Sheerman) will confirm what I have said about the difficulties facing manufacturers in his constituency.

Mr. Sheerman: The right hon. Gentleman is right. Labour Members are concerned when times get tougher

rather than easier, and they are not as easy as they could be at the moment. I must respond to the right hon. Gentleman's remarks. Between 1979 and 1997, under the previous Administration, 2.6 million jobs were lost in manufacturing. Blame for the basic state of our manufacturing industry should be laid at the door of Thatcher, Major and the Administrations of which the right hon. Gentleman was a part.

Mr. Redwood: The hon. Gentleman should have referred to my right hon. Friend as the right hon. Member for Huntingdon (Mr. Major).

Mr. Sheerman: I am sorry.

Mr. Redwood: The hon. Gentleman is wrong. The Leader of the Opposition and I have, on several occasions—often at the behest of Labour Members, but sometimes voluntarily—confessed that mistakes were made in the early 1990s when we were in the exchange rate mechanism. Conservative Members regret that: we have been over this matter many times before, and we have apologised to the nation. I am waiting for an apology from Labour Members. Why will they not apologise for supporting that policy? It was the only economic policy of the Conservative Administration that they ever supported, and it was the one that went wrong and did damage.

Mr. Nicholas Soames: I congratulate my right hon. Friend on the measured way in which he responded to that fatuous intervention.
Is my right hon. Friend aware that, in my constituency, companies that have done extraordinarily well in the past few years are now under great and increasing pressure? As of the last few weeks, there is a risk of numerous manufacturing redundancies in the south-east. How does that put the remarks of the hon. Member for Huddersfield (Mr. Sheerman) into context?

Mr. Redwood: My hon. Friend is right. There is a threat to manufacturing jobs in all parts of the country, including his constituency and those of other Conservative Members in the south of England, as well as the areas in the north and the midlands to which I have referred.
The hon. Member for Huddersfield began by agreeing that times are difficult, and I was grateful for that. What he and his right hon. and hon. Friends do not appreciate is this. The present Government now purport to be in control. They have been on watch for more than a year, and they have made many changes in economic policy. It is their tax rates that are now determining our economic future; their interest rates, through the Bank of England, that are determining the future of manufacturing; their sterling rate policy, or lack of one, that is doing the damage. I would have accepted, after a month or two of Labour Government, that what Conservatives had done had had more impact than what Labour was doing. Our case today, however, is that it is Labour's policies that are coming home to roost, and Labour's policies that are doing the damage. If Labour had stuck with our policies, fewer factories would have closed.

Mr. Dale Campbell-Savours: What would the right hon. Gentleman do to reduce the exchange rate? Would he reduce interest rates? Is that the policy that he would pursue?

Mr. Redwood: I am grateful to the hon. Gentleman for seeking advice from the Opposition in these parlous times


for the Government. If he will restrain his impatience, I will set out later in my speech six measures which I think will help a great deal; but I will give him one easy answer to start with. I believe that the Chancellor should promote savings rather than taxing them. If he promoted savings, the Bank would not need to drive interest rates so high. It has driven them so high because it despairs of the low savings rate in this country, and of excess consumption.

Mr. Campbell-Savours: May I ask the right hon. Gentleman exactly the same question? Would he reduce interest rates—yes or no?

Mr. Redwood: I am saying that the Opposition would follow policies that would produce lower interest rates, even from a so-called independent Bank of England. I will set out at some length the way in which we think the Government, even now, should do that.
Why does the hon. Gentleman not understand that, if the Government reversed their policies on the taxing of savings, more money would be saved and less would therefore be spent? The Bank would then be less worried about inflation taking off in the shops and the service sector, and would not need to panic about interest rates as it has to now, given the awful policies followed by the present Government.

Mr. Denis MacShane: I read in the papers this morning that the right hon. Gentleman's party was about to embark on an apology tour of the country. I hope that he will be leading those in sackcloth and ashes.
The right hon. Gentleman has blamed the early 1990s. Is he aware that the collapse of profits—not yet jobs—in the steel industry arises directly from the increase in sterling that took place in the last year of Conservative Government? Between May 1996 and May 1997, sterling rose by 70 per cent. against European currencies; since then, it has risen by 9 per cent. The former Chancellor is responsible for the 70 per cent., and we are responsible for the 9 per cent. Will the right hon. Gentleman join me in condemning the former Chancellor as a useless has-been who has nothing more to say on current economics?

Mr. Redwood: The last Chancellor of the Exchequer did a great deal more good to British industry than the present Government have done in their first year.
The hon. Gentleman should check his facts. There is no way that sterling appreciated by 70 per cent. against the European currencies in a single year—our last year in office. That is complete nonsense. What is true is that the level of sterling when we left office was high but just about bearable for those manufacturers; and it is the further turn of the screw over the past year under Labour that has done the real damage and led to all those announcements of further job losses.

Mr. Sheerman: May I try to be helpful on that point?

Mr. Redwood: I do not know whether the hon. Gentleman will be helpful, but I give way.

Mr. Sheerman: I am seeking to be helpful. The Library has given me a list of interest rates over the past

40 years, which clearly show that the previous Chancellor was not the only person responsible for high interest rates and what happened to our country. From 1979 until the most recent terrible recession, Conservative Governments almost without exception were persistently high-interest Governments, who made a competitive disadvantage the bedrock on which our industry had to build. That is the truth. If the right hon. Gentleman wants me to pass the figures to him, he can read them out.

Mr. Redwood: The hon. Gentleman should look at the real interest rate and understand that we inherited very high inflation from the outgoing Labour Government in 1979. Interest rates in nominal terms had to stay high for quite a time to cure that, but, in the 1980s, with much help from the private sector, the Conservative Government rebuilt, for example, the motor industry, which had been gravely damaged in the 1970s by the Labour Government. Now a new Labour Government, after only just over a year in office, are beginning to do the same sort of damage to those industries that they did in the 1970s—back to the past; back to the problems. There have been more job losses in all the crucial industries and in manufacturing heartlands throughout the country.
Meanwhile, where the Government can make a difference—where the Board of Trade could do something to help business—business is left in doubt about the Government's intentions, as the Government prove unable to make up their mind. We need to know: are the Government willing and able to save the pits, or will coal jobs go the way of those many other jobs in exporting industries that are being lost?
We need to know why we were treated to a non-statement on energy, with all the detail left out and left over for a later date. Why have we been drifting without an energy policy for a whole year? Does the President of the Board of Trade plan to announce a proper policy to the House before it rises? [Interruption.] The Minister for Science, Energy and Industry comes in on cue, saying, "Not again." I will go on asking those questions until there is a proper energy policy that we can understand and that the country can either support or criticise.
Does the President of the Board of Trade plan to announce this proper policy before the House rises, or is the intention to leak it to the press during the recess, when we are not able to scrutinise it properly in the House? The right hon. Lady has had over a year to produce a sensible policy and there is still nothing: no detail, no reassurance for coal or for gas, everyone left in the dark. At least the lights are still on, because we have a privatised industry; if Labour was running it, I doubt whether that would be true.
When will the President of the Board of Trade have a policy for the nuclear industry? Has she yet decided how to phase the rundown of Dounreay? Will she tell us if she is satisfied that all the other nuclear facilities that are currently working are safe and have a safe future under her stewardship at the Department of Trade and Industry? How long is she going to hold up gas power station applications? Is she sure that it is legal to do so? When will she realise that, if she wishes to be greener, she has to be friendly to gas?
When will the DTI have a policy for the Post Office? The Royal Mail is being held up by Government delays. The management would like to do some deals with private


sector companies throughout the world. The Post Office understands that it is a fast-moving global marketplace and wishes to join in, but, obviously, it cannot do so with a full Treasury guarantee and the current ownership structure. Will the President of the Board of Trade let the Post Office develop as a global corporation doing well for Britain? Is she brave enough to convert the Post Office into a public limited company and introduce private capital?

Mr. Ian Bruce: I wonder whether my right hon. Friend is being somewhat unfair to the President of the Board of Trade. Surely, all those issues are going to be decided by No. 10, the Treasury and the magic circle—and we all know that she is not part of that.

Mr. Redwood: It is true that some lobbyists have put around that slur on the reputation of the President of the Board of Trade, but, for once, I am being fairer to her than my hon. Friend. I am assuming that, in future, she will have some influence on these matters and will at some point use her high office of state to try to do some good for British industry. I confess—my hon. Friend is right—that there is no evidence so far, but I live in hope that she will one day come up with a policy and that that policy may do a little good. Why will we have to wait for a year and a half before the Government can answer simple questions on the future of the Post Office?
I ask the President of the Board of Trade—if she has finished talking to her colleagues on the Treasury Bench—why the Chancellor is lecturing us all on the need to keep wage increases down if we wish to preserve jobs while she is busily legislating to put wages up.
Has the right hon. Lady had any more thoughts about her minimum wage legislation? Does she not understand that our worry about it is primarily that it will lead to all sorts of pay rises for those on rather higher pay who wish to keep their differentials? I have heard no convincing argument from her that that is unlikely to happen. I also find it extraordinary that her Department—in this time of open government, which we know and love so well—is not prepared to give us the figures and forecasts and tell us the truth about how many jobs will be lost and by how much wages will rise as a result of her policy, which is pulling in exactly the opposite direction to that of the Chancellor of the Exchequer.

Mr. MacShane: The right hon. Gentleman is being generous in giving way. As he is dealing with the wages problem, would he care to tell the House how much he is being paid as a consultant by Murray Financial to undermine building societies and mutual insurance firms?

Mr. Redwood: I am a director of that company, which is not out to undermine building societies. Although I do not wish to spend the debate answering for that company rather than dealing with matters of public policy, I am quite happy to declare that I receive from that company a director's fee of £12,000 a year, which is a modest one. The company has no intention of raiding building societies that do not wish to talk to it.
I do wish that Labour Members would get away from trying to cast slurs on those who are pursuing a decent occupation, and would get on with understanding the grave problems that the Government face and the

Government's relationships with lobby companies. When we come to the real issues at the bottom of this debate, I doubt whether I will receive from Labour Members any answers as straight and honest as the one that I have just given.
Why is the Chancellor of the Exchequer for ever lecturing us on the need for prudence, only then to announce a rapid expansion of public spending? I wonder whether we will even have to come to the House to hear an announcement, as I am sure that we will read all about it in the newspapers well in advance of the event.
Why is so much of the spending to go on welfare when the Government, when in opposition, said that they would spend less on what they then called "economic failure".

Dr. Stephen Ladyman: I am grateful to the right hon. Gentleman for giving way before he moves too far away from the question asked by my hon. Friend the Member for Rotherham (Mr. MacShane). The right hon. Gentleman has said that he wants to encourage saving and to keep inflation and interest rates down. Does he not understand that windfalls for the few were one of the main inflationary pressures that led to interest rate rises; that the windfalls were already affecting the economy when the Government came to power; and that he—by joining Murray Financial—will continue them in future?

Mr. Redwood: I am delighted that the hon. Gentleman thinks that Murray will be so successful that—from being such a small company—it will have an impact on the United Kingdom money supply. However, I think that it is better if I speak for the Opposition and not for the company, which he is dragging me into doing.
When will the President of the Board of Trade get around to making some decisions on how the new competition policy is meant to work? Does she not realise that the Competition Bill—her Bill—is weak on monopolies and services of general economic interest? Does she not worry that it is so badly drafted that pubs and brewers, newsagents and publishers, oil companies and filling stations still do not know where they will stand when it comes into effect?
It has been a very wet June, and July has been even wetter. The weather has been cold enough to leave people diving for pullovers rather than swimsuits. England was ejected from the world cup competition amid controversy about the conduct of one of the star players, and with relief that a small band of hooligan supporters would return home early. The cricket team has not done well in the tests. I remember Labour saying that things would be better if it was elected. It has not worked out like that this summer.
I do not blame the Government for the deterioration in the weather or for the sporting disasters—although doubtless they would have claimed credit if things had turned out differently—but I do blame them for changing the business climate for the worse. I do hold them responsible for playing the economy so badly that manufacturing is already in recession. I do hold them responsible for disrupting our hard-won trade union settlement with their half-baked reforms. Let us make no mistake about it—Labour is taking us back to the bad old days and the bad old ways of the 1960s and 1970s.
The Government inherited the best strike record of any country in Europe. Last week, there was a firefighters' strike in Essex, today there is a tube strike, and soon there


will be rail strikes. I fear that other public service workers will also go on strike as they watch the private sector wage explosion that the Government have triggered while their own pay falls far behind.
The Government inherited low business taxes. They have already increased them by £25 billion during this Parliament and are planning more tax raids on success and enterprise. It would be helpful to the oil industry if the President of the Board of Trade could tell us something about the Government's intention to raid the oil companies, but I expect that that will be another issue that they will leave until the recess, when Parliament is not here to cross-examine them on another set of tax increases.
The Government inherited low inflation. Wages are now rising at a rate of 5.9 per cent. a year in the private sector, and inflation is well above the outgoing Government's target or the current Government's target. It is not just City bonuses; wage inflation is setting in thanks to Government policies. They inherited a respectable level of savings and they said that the country needed to save more. I agree. That would have been the right response to the gathering momentum in the economy. Instead, according to Red Book figures, the country will save 1 per cent, less of our national income this year—around £8.5 billion less savings—thanks primarily to the taxes that the Government imposed on pension funds and the replacement of personal equity plans and tax-exempt savings accounts with something less generous.
The Government inherited low interest rates. Now, six rate rises later, and with more threatened and likely, things are not nearly so easy for business borrowers. Perhaps the Government foolishly believed one of Labour's five promises: that interest rates would be kept as low as possible. Perhaps the Government will have the gall to say that they honoured their promise, since for them it is not possible to keep rates very low.
The Government inherited a high, but just manageable, level of sterling. They have increased it to a level at which exporting is either impossible or unprofitable for many firms. In place of the success that we were generating, Labour offers strikes, more laws and higher taxes. In place of financial prudence, Labour offers higher public spending.

Mr. John Bercow: Does my right hon. Friend agree that the Government are most certainly to be held to account for foolishly giving up for determination by qualified majority voting within the European Union an increasing range of domestic working practices which should properly be the responsibility of elected parliamentarians and the British legislature? Does my right hon. Friend recall that, when challenged on that point by John Humphrys on the BBC programme "On the Record" on 9 November 1997 as to what she would do if the European Commission proceeded with plans for national works councils, the President of the Board of Trade feebly responded, "Well, er, we shall see how things go"? It is not encouraging, is it?

Mr. Redwood: Indeed it is not. The President of the Board of Trade has suddenly discovered two things: first, the proposal is not popular, and, secondly, she may not be able to block it because it may be wanted on the continent. They never explained that to her at No. 10 when they were setting out the joys of the social chapter.
The Wall Street Journal Europe summed it up rather well, in respect of just such a proposal and just such difficulties, when it stated:
the only thing "new" about New Labour seems to be an old-fashioned failure—European corporatism".
The Government are busily disguising the true cost of their social security and welfare-to-work programmes, embarrassed as they are about the fact that their spending is soaring well above our totals in the interest of paying for what they always used to call economic failure. In the place of common sense to control wage inflation, Labour has decided to give powers to shop stewards and to Brussels, making it more difficult to preserve good labour relations and inflation-free wage increases.

Mr. Sheerman: Just to be helpful to the right hon. Gentleman, if things are so bad—[Interruption.]

Mr. Redwood: I was about to give way to the hon. Gentleman, but I wonder whether I should do so now, in view of his impatience.

Mr. Sheerman: Before anyone panics at the right hon. Gentleman's tale of decline—if a few people somewhere are still able to listen to the proceedings of the House of Commons—may I refer hon. Members to Mr. Adair Turner's foreword to the July-August edition of CBI News? Mr. Turner represents a large section of British business and is very warm about the Labour Government; he is not ringing any alarm bells. He says:
The Fairness at Work White Paper finally came out in May. As expected, it was a mixture of good and bad news. It certainly represented a shift towards employee rights, but it was by no means as dramatic as might have been feared, and it leaves intact much of the industrial relations legislation of the 80's".
If even Mr. Adair Turner is not worried about what we are doing, why is the right hon. Gentleman so full of doom and gloom?

Mr. Redwood: The Confederation of British Industry is very worried about the social chapter, as it believes that further damaging policies could emerge about which we could do nothing. The quotation that the hon. Gentleman read said that the only good thing about the Government was that they had not wrecked all the 1980s legislation. Surely the answer is to retain the 1980s legislation and to do something else more profitable for British enterprise and jobs.
Labour is creating an economy fit for lobbyists to thrive in. The refusal of the Department of Trade and Industry to spell out an energy policy has encouraged some to try to write that policy by hiring lobbyists. The uncertainty of the Department of Health about tobacco advertising made the Government prone to changing their mind when the right pressure was applied. As manufacturers suffer, lobbyists thrive.
Does the President of the Board of Trade think that that is a healthy state of affairs? Does modernising the economy mean closing down steelworks and textile mills, so that the only growth is in the behind-closed-doors influence business for former Labour advisers, who are now dining out in style? Are we to rest content with a crony economy in which even the Audit Commission needs a lobby firm to do its research? What has happened to all those old-fashioned values that the Chancellor and


the President of the Board of Trade espoused in opposition, to sustain an industrial economy in which firms went from strength to strength by making things and selling them abroad?

Mr. Campbell-Savours: Hear, hear.

Mr. Redwood: I am delighted that at least one old Labour Member remembers those promises. Unfortunately, as he knows, Labour Front Benchers are not delivering on those beliefs; they are failing to live up to those genuine sentiments that some Labour Members hold.
Today, I ask the President of the Board of Trade to promise a new set of rules to govern lobby companies. Will she reassure us that we shall always be able to know who the directors are, who the principal shareholders are, how much the directors are paid and how much income and expenditure the business enjoys? That is not asking too much, as I am sure Labour Members will agree. Surely the public should be able to know such simple things about a business that sets out to lobby the British Government and to influence public policy.

Mr. James Gray: Is my right hon. Friend aware that the Association of Public Policy Consultants—the body that looks after lobbying companies—is strongly in favour of precisely the registration that he describes?

Mr. Redwood: I am grateful to my hon. Friend. What he says makes it much easier for the President of the Board of Trade to throw the weight of her office behind such proposals.

Mr. Campbell-Savours: Will the right hon. Gentleman give way on that point?

Mr. Redwood: May I give way at the minute of my choosing? I want to develop the argument a little.
Members of Parliament are paid to lobby the Government in the interests of their constituents. Rightly, we are expected to declare our sources of income and any directorships that we may hold. I decided to discover what I could find out about two of the lobby companies that have recently been much in the news.

Mr. Campbell-Savours: What has that got to do with the motion?

Mr. Redwood: It has a lot to do with the motion. I am arguing that there are two economies. It seems that the only way in which the manufacturing companies, which are in serious distress, can get their message to the Government is by spending even more money on hiring lobbyists to make their case for them, as the Government are bypassing Parliament and not listening to the many representations that we are making. I wanted to know who owned GPC Market Access. I was told—

Madam Speaker: Order. In the past five or 10 minutes, the right hon. Gentleman seems to have strayed a long

way from the motion to which he should be speaking. I urge him and other hon. Members to speak to the motion and the amendment.

Mr. Redwood: I will, of course, speak to the motion, Madam Speaker, but part of our case is that, to have more successful Government policies for the industrial economy, we need to change our arrangements for lobbying, and, with your consent, I would like to develop that a little further.
I asked who owned GPC Market Access Group Ltd., and I discovered that it is owned by Countrywide Porter Novelli Ltd.—

Mr. Campbell-Savours: On a point of order, Madam Speaker. I have examined the motion and the amendment carefully, and I cannot see how what the right hon. Gentleman is saying relates to them. Could you clarify the matter, because it seems to me that he is totally out of order?

Madam Speaker: I have already made my views known to the right hon. Gentleman. I hope that I have a sense of humour, and I enjoy a little bit of knockabout as much as anybody else in the House, but I think that he should now deal with manufacturing and industrial relations.

Mr. Redwood: As I was saying, Madam Speaker, I believe that we need to know more about how the lobby groups work to see whether they are the right way for manufacturing industry to make its case. I discovered that Diversified Agency Services Ltd. and GPC International Holdings of Ottawa—

Mr. Campbell-Savours: On a point of order, Madam Speaker. The right hon. Gentleman is simply ignoring what you are saying.

Madam Speaker: The right hon. Gentleman will not defy me for much longer. I will give him two more minutes to return to manufacturing and speak to the motion.

Mr. Redwood: I am grateful, Madam Speaker.
I want the House to know that a company such as LLM is 40 per cent. owned by Robert Stevens Holdings, which in turn is owned by trustees in Jersey. Bedell and Cristin Trustees is owned by Premier Circle Ltd. and Second Circle Ltd., which is owned by Premier Circle Ltd. and Third Circle Ltd., which is owned by Premier Circle Ltd. and Second Circle Ltd.
Why does a lobbying company, set up by former Labour advisers to pursue the interests of, say, manufacturing industry, have such a complicated shareholding structure? What is the role of the Jersey trusts? Why are there three Circle companies, and why do any reasonable inquiries about them go round in circles? Why is one of the companies called Premier Circle? Could there be some mistake over the exacting meaning of Premier in this context?
What do the Government think about the use of Jersey trusts and companies to control shares in other companies owned by former Labour advisers? Did not those same advisers help the Chancellor of the Exchequer when,


as an Opposition spokesman, he made speeches condemning the use of offshore vehicles? Do the Government believe—

Mrs. Gwyneth Dunwoody: On a point of order, Madam Speaker. In my constituency, there are many manufacturing units in very real trouble. I had hoped that we would be debating that today. Lobby companies are not known for manufacturing a great deal, except rather more heat than light.

Mr. Ian Bruce: Further to that point of order, Madam Speaker. I know that the House has examined the motion carefully, but we should also look at the amendment, which
welcomes the new culture of partnership…developing within the framework of measures and proposals the Government is taking forward".
That is clearly germane to the partnership that the Government now have with the lobbyists and the cronies.

Madam Speaker: I accept that that is mentioned, but the debate has been going on for 32 minutes and we have not yet heard about manufacturing. I represent a vast area that is closely interested in manufacturing. My black country towns will be very interested in this debate. I shall see that my manufacturers have a copy of the Hansard report.

Mr. Redwood: I think that I have asked the questions that I wanted to ask about that group of companies, but the Government must answer them, given the width of their amendment and the fact that, like it or not, lobbying is now part of our business culture. Businesses need to be told, fair and square from the Dispatch Box, that the Government intend to go back to the old system: if business has a problem, it lobbies its Member of Parliament, who lobbies the Minister. That is how it should be done. It should not be done through the back door via exotic companies and strange holdings, including Jersey trusts. I hope that the President of the Board of Trade agrees that that is an odd way to behave. The old parliamentary way is the best.

Mr. MacShane: Does the right hon. Gentleman agree that a firm has the third option of hiring an hon. Member from the Tory Front Bench, just as Murray Financial has done in his own case? Nineteen other Tory Front Benchers have extensive outside interests. That is the real sleaze and corruption that worries the people of this country.

Mr. Redwood: Madam Speaker, I hope that the hon. Gentleman will withdraw his disgraceful allegation.

Madam Speaker: Order. I was distracted, and did not hear all that the hon. Member for Rotherham (Mr. MacShane) said. Would he repeat it precisely so that I can make a judgment?

Mr. MacShane: I said that what worries people outside the House is the record of Conservative hon. Members in government and in opposition being hired by outside firms to represent their interests. That sleaze and corruption—

Madam Speaker: Order. I have heard enough. The debate should be about policies and principles, not about

individuals. The sooner we get on to the policies and principles of manufacturing and industry, the better it will be for the House. The way this debate is turning out is a disgrace.

Mr. Redwood: Labour Members should understand that there is nothing wrong with a Member who is not in the Government holding a directorship that is properly declared, so long as the House is not used to further the interests of the company concerned. If the hon. Member for Rotherham (Mr. MacShane) is suggesting that any of my right hon. and hon. Friends has done otherwise, he should make a proper allegation, giving them the right to reply. I can assure him that it is not so. He is just trying to put up a smokescreen to hide the dreadful business culture that the Government are encouraging or allowing to occur.
I turn now to positive conclusions on what we should do to help manufacturing industry.

Mr. Sheerman: On a point of order, Madam Speaker. We are getting to the heart of a principle important to a debating chamber such as Parliament. When someone speaks here, does he or she speak for his or her constituents, or does he or she speak for a particular interest that probably pays more than a parliamentary salary? It is important that—

Madam Speaker: Order. The right hon. Member for Wokingham (Mr. Redwood) is speaking on behalf of the Opposition. He has just announced that he is getting to the substance of what he has to say.

Mr. Redwood: I want to make six points about how to help industry out of the terrible position it is in while services and other companies are booming.
First, the Government should promote savings, not tax them. They should change their minds on taxing pension funds, and on replacing personal equity plans and tax-exempt special savings accounts with something that is less satisfactory and generous. They should think up new policies to promote savings. It is better to save more than to put manufacturing and exporting into a vice.
Secondly, there is social legislation. We all want people to have decent conditions at work and good health and safety protection. However, does not some of the Government's legislation go too far? It will destroy jobs, and remove opportunities for the young and unskilled people who most desperately need a first step on the ladder. That is not kindness; it is callousness of the first order.
Thirdly, we need stable policies, and statements from the Government of their policies on crucial industries and nationalised companies. We need a policy on financing the tube network, and a resolution of the strikes. We need a policy on energy, so that the gas and coal industries know where they stand. We need a policy on the Post Office, so that it can grow and expand abroad to improve its competitive position there and at home. We need a policy on water competition—we have been waiting for that for a long time—which could generate new jobs and new business. We need a proper policy on competition after a sham of a Bill that is full of holes and errors. The Government have been unwilling to tell companies where they stand.
Fourthly, we need a monetary policy that makes sense. The experiment of handing policy to the Bank of England has led to a monthly debate being leaked and discussed in the newspapers. It is a kind of soap opera, with the Government looking on and saying that it is nothing to do with them. They should take some responsibility for our interest rates. They should at least have the courtesy to back the Bank of England, rather than going occasionally around the back to brief against the Bank.
Fifthly, we need to know the truth about the Government's wish to enter economic and monetary union. Will they confess that all the other countries are going in at their exchange rate mechanism mid-rates? Does the President agree that no separate deal was negotiated for Britain, which must mean that what the Prime Minister brought home for British business was entry at DM2.95, our ERM mid-rate? Will the Government devalue the rate or negotiate a special deal? Will the Government tell business the truth: they let business down on this, as on everything else, and it has the opportunity only to enter EMU at a crippling rate?
Sixthly, will the Government set out proper, fair rules of disclosure for lobbying companies? Will they return to the old system, whereby the House speaks for manufacturing and exporting? The Government have a duty to listen, for a change, to what the House is saying. We do not want a culture whereby one must know someone or pay someone in order to make one's point. People must speak through their Members of Parliament and, above all, the Government must take the House of Commons seriously.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mrs. Margaret Beckett): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
welcomes the measures the Government has taken to build an economy which is healthy and sustainable in the long term, including placing the control of interest rates with the independent Bank of England; notes that over the last 12 months investment has grown by 7 per cent., 14,000 manufacturing jobs have been created and the public finances have been put in order; welcomes the new culture of partnership in industrial relations which is developing within the framework of measures and proposals the Government is taking forward; urges the Government to continue its own productive partnership with both business and employees; and condemns the Opposition for its own record in government of allowing manufacturing to decline within a boom and bust economy of unprecedented proportions and actively and sustainedly destroying partnership and democracy in the workplace.
From the outset, I must say that I fear that I am likely to disappoint the right hon. Member for Wokingham (Mr. Redwood), who asked me a string of questions about a string of issues—about which he has raised questions and made speeches elsewhere—that are not related to the subject of today's debate. Unfortunately for the right hon. Gentleman, I plan to speak about the subject of the debate, which the Opposition called. I got the distinct impression from the right hon. Gentleman's speech that, after he called it, he thought better of it, because he did not say much about the subject.
The motion tabled by the right hon. Gentleman and his hon. Friends creates the impression that they think that this is somehow year zero. They talk about the

Government's creating a "boom and bust economy" and about the "growth of industrial unrest". I suspect that the second charge is thrown in just to make up the numbers, so it might be wise to deal with and dispose of it first.
Mention has been made of today's London Underground strike and a couple of other minor industrial disputes, which, of course, we regret very much. However, far from being a signal that the Government's policy is creating unprecedented unrest, tube and rail strikes were not only common under the previous Government but a feature of their last year in office. The denial of investment in rail and underground and the neglect of public transport as a whole eroded morale and trust, and that erosion is part of our inheritance from the previous Government.
We have already taken steps to reverse that investment backlog. In March, the Deputy Prime Minister announced radical and innovative proposals for a public-private partnership for the underground in which it will remain in public ownership but will benefit from the investment so long denied it. The fact that there is still concern about the long-term implications of the programme says more about that inheritance of mistrust and insecurity than it does about any flaws in the policies that the Government are pursuing.
The motion does not refer to the tube strike as such; instead, it expresses
concern at the growth of industrial unrest in several sectors of the economy".
In roughly the last year before Labour came to office, 1.3 million days were lost through industrial action. In the first full year of this Government, 183,000 days were lost through industrial action. That is seven times lower than the figure for the last year of the previous Government and about 40 times lower than the annual average for the 1980s. That is a record—in fact, it is the lowest figure ever recorded for days lost in industrial action, and the records go back to 1891. I will repeat that in order to avoid doubt: the records date back not to 1991, but to 1891.
Of course, it is perfectly legitimate for the Opposition to comment on and, if they can, make political capital from any industrial relations problems. However, it is a bit damn silly to talk about the growth of industrial unrest in what has been the best year of industrial peace for more than 100 years.

Mr. Gray: rose—

Mr. Tim Boswell: rose—

Mr. Gray: I am grateful to the right hon. Lady for giving way to me, rather than to my hon. Friend the Member for Daventry (Mr. Boswell). If the right hon. Lady has available a wealth of statistics stretching back to 1881, perhaps she would care to enlighten the House regarding the number of days lost through strikes in 1975, 1976, 1977, 1978 and 1979?

Mrs. Beckett: There were not as many as in the 1980s. As I have said, none of those issues in any way alters the fact that the Opposition tabled a motion deploring the "growth of industrial unrest" at a time when there is no evidence whatsoever to back up that claim. Indeed, that is typical of the motion as a whole.

Mr. Boswell: I am sure that the right hon. Lady would not seek to mislead the House, but, taking the years that I


think were cited—I round the figures—the number of days lost was 6 million in 1975, 3.2 million in 1976, 10.1 million in 1977, 9.4 million in 1978, and 29.4 million in 1979. There is no figure comparable with that in the 1980s except for the 27 million days lost in 1984 with the miners' strike. I do not find her figures sustainable.

Mrs. Beckett: It would be superfluous to comment on that. The hon. Gentleman has shot himself in the foot by citing those statistics.
The motion talks of the Government creating a "boom and bust economy". Of course, the Conservatives are the experts. No one has ever been better qualified to talk about boom and bust than they: 18 years in power, unprecedented billions of pounds of windfall profits from the North sea—and they delivered the two biggest post-war recessions, separated by an unsustainable boom.
The motion also talks about the damage to manufacturing from the economic instability that the Opposition claim that we have introduced through
high sterling and rising interest rates".
Short-term interest rates are below the level at which they were held for the first 13 years of the previous Government's tenure of office.
The right hon. Member for Wokingham admitted, with even more clarity than previously, that the previous Government made mistakes in the 1990s when they entered the exchange rate mechanism. He commented that entry into the ERM was supported by Labour in opposition, although no one ever suggested that we should go in at the rate we did, which was the achievement of the former Prime Minister.

Mr. Bercow: Will the right hon. Lady give way on that point?

Mrs. Beckett: No.
The right hon. Member for Wokingham was careful to say that the Opposition apologised for that, and that only, as if it was the only mistake to which the Conservative party is owning up. Although he chose to concentrate solely on that period, during their tenure of office interest rates reached 17 per cent. in the early 1980s. At one point in that intensely difficult period, manufacturing output had fallen by nearly 20 per cent. In 1981 alone, 650,000 manufacturing jobs were lost. Between 1979 and 1983, a total of 1.25 million manufacturing jobs disappeared. That was in the early 1980s.
In the late 1980s and early 1990s, interest rates reached 15 per cent., manufacturing output fell by more than 5 per cent. and, in 1991 alone, another 400,000 manufacturing jobs were lost. When the Conservatives left office, manufacturing output had increased on average by only 0.5 per cent. in each of their 18 years; so, too, had manufacturing investment.

Miss Anne McIntosh: Will the right hon. Lady give way?

Mrs. Beckett: Not for a second.
Britain had its first ever deficit on trade in manufactures—at least the first since the industrial revolution when manufacturing was invented in this

country. As for jobs in manufacturing, my hon. Friend the Member for Huddersfield (Mr. Sheerman) pointed out that, when the Conservatives left office, there were 2.5 million fewer jobs than when they came into office. As for the level of sterling, not only did interest rates under the Conservatives reach levels twice as high as they are today, but sterling was at a higher level against the deutschmark than it is today. That was during the period when the shadow Secretary of State was a Minister at the Department of Trade and Industry.

Mr. Gray: As we are getting such a wealth of historical information, perhaps the right hon. Lady will comment on average interest and inflation rates under the last Labour Government. If she is unable to, I am certain that my hon. Friend the Member for Daventry (Mr. Boswell) will be happy to enlighten her.

Mrs. Beckett: I would not exactly call this history. After all, the Government have been in office for only 15 months. We are talking about the whole period of office during which the Conservative party was in power. As for the levels of interest rates and sterling, under this Government they are not at anything like the levels that they reached under the Conservative party.
The shadow Secretary of State claims that he acknowledges that and that he and his party have said, "Whoops, sorry," although it was not so full an apology that anyone but he can remember it. He says that we should put behind us their catastrophic record as stewards of manufacturing industry. No chance, I am afraid.
There is no doubt that we can dismiss with contempt most Conservatives' pretensions to speak on behalf of British manufacturing, but that does not mean for a second that I do not fully recognise and acknowledge the genuine concern felt and expressed by British manufacturers at what they see as the current erosion of their competitive position and the sharp anxiety that many feel about their order books, their export prospects and—if the worst comes to the worst—the consequences for employment. At every level, the Government are fully aware both of the importance of the contribution that manufacturing makes to our economy and of the pressures that some manufacturers are presently experiencing. I know that manufacturers' concerns are also heard and heeded by many of my right hon. and hon. Friends on the Back Benches.

Dr. Ladyman: My right hon. Friend makes a powerful case that the Opposition have had some sort of vision on the road to Damascus and are now supporting manufacturing. Does she, like me, recollect that, either when he was an adviser to Mrs. Thatcher, shortly before being elected to the House, or shortly thereafter, the right hon. Member for Wokingham (Mr. Redwood) appeared on television and, when asked about the balance of trade and manufacturing industry, replied, "It really isn't important; it really, really does not matter," and repeated those comments in respect of the balance of trade?

Mrs. Beckett: I am grateful to my hon. Friend, because I had not remembered that interview—at that time, I was not hanging on the right hon. Gentleman's every word as I do today. I can well believe that the remark can be


attributed to him, because I am well aware that, at that time, that was the view not only held, but expressed, by the Conservatives.

Miss McIntosh: Will the right hon. Lady give way?

Mr. David Winnick: Will my right hon. Friend give way?

Mrs. Beckett: I shall give way to the hon. Lady, because she asked first.

Miss McIntosh: Can the Secretary of State give me some guidance? If a manufacturing company in the Vale of York wished to approach either her or a fellow Minister, would her door be open to receive a visit from that manufacturer—the Secretary of State for International Development has suggested that such a contact must come directly from a manufacturing company that is worried, perhaps about the minimum wage or about jobs being lost because of the recession—or would she insist that the company went through a lobbying company before being granted access?

Mr. Winnick: rose—

Madam Speaker: Order. I must ask the Secretary of State to respond to the hon. Lady before I call another hon. Member.

Mrs. Beckett: I beg your pardon, Madam Speaker. I sought to curtail matters for the convenience of the House. I would say to the hon. Member for Vale of York (Miss McIntosh) that, although I cannot undertake to accept every single invitation and request, my door is very much open to manufacturing industry—indeed, I do not wait for manufacturers to come to me; I go to them.

Mr. Winnick: There is indeed concern in the west midlands about the current state of manufacturing industry and we do not attempt to disguise that. However, is it not right to recall that when, under the previous Government, we twice went into recession, it was the west midlands which bore the brunt? From 1980 to 1982, large parts of the manufacturing areas of the west midlands were absolutely devastated, yet the Tory protest at the time was, to say the least, minimal. There are hardly any lessons to be taken from a party that caused so much damage to so many people in the west midlands, the heartland of manufacturing industry.

Mrs. Beckett: My hon. Friend is entirely right. I confess that my attitude toward those Conservatives who, at that time, spoke up on behalf of manufacturing industry is rather different from my attitude toward those who did not.

Mr. Bercow: Will the right hon. Lady give way?

Mrs. Beckett: I do not recall the hon. Gentleman being one of those who spoke up, so, if he will forgive me, I shall get on with my speech.
It is only fair to recall that many people, whether in manufacturing or elsewhere in the economy, recognise that a range of factors contribute to present circumstances. Those factors include the unaddressed inflationary pressures that we inherited from the Conservatives. In the context of the debate, it is important not to forget that, from December 1996, the Bank of England pressed the then Chancellor to raise interest rates and thus ease the inflationary pressures that the Bank saw building up. There is also the Asian crisis, with its inevitable impact on growth and exports; and the anxieties about the run-up to the euro.
All those factors contribute to the pressure on sterling; all those pressures contribute to the circumstances in which manufacturing industry finds itself; but none of them is the "creation", to use the word in the Opposition motion, of the Labour Government. The fact that what is happening to sterling is, in all likelihood, the result of a complex interaction of those factors means that dealing with that problem is not, as so many Opposition Members try to pretend, simply a matter of taking back interest rate control from the Bank of England or, indeed, of lowering interest rates. It is possible that if interest rates were lowered without regard for the consequences for inflation, as some Opposition Members appear to be demanding, we would increase inflationary pressure without necessarily achieving a lower exchange rate.

Mrs. Dunwoody: Might not that be a clear indication that we should not even contemplate entering the euro until we are sure that it is in our interests?

Mrs. Beckett: My hon. Friend will be aware that that is the Government's policy. We take the view that it is in Britain's interests to contribute, in so far as we can—as we sought to do during our presidency of the European Union—to a stable development of economic and monetary union and the euro, in case that is one of the factors that are putting pressure on sterling. However, we believe that, if the Government decided to recommend entry, which we would do only if we believed that it was in Britain's national interest, that decision should be put to Parliament and the British people.

Mr. Bercow: Is the right hon. Lady aware of the statement by the president of the Bundesbank, Mr. Tietmeyer, that, within a single European currency,
it is an illusion to think that states can hold on to their autonomy over direct taxation policies"?
Does the right hon. Lady agree with that statement, which is obviously important because of its implications for manufacturing industry? If she thinks that it might be vindicated, would the cession of sovereignty over direct taxation constitute for her a constitutional bar to Britain entering the European single currency? Yes or no?

Mrs. Beckett: It is rather silly to ask such a question and then ask, "Yes or no?" I was not aware of the statement that the hon. Gentleman attributes to the president of the Bundesbank, but if that is the view that he has expressed, I strongly, indeed violently, disagree. What is more, I suspect that the German Government disagree. That is their problem, not ours.

Mr. Tam Dalyell: My question is pursuant to that asked by my hon. Friend the Member


for Crewe and Nantwich (Mrs. Dunwoody), with whom I usually agree about everything in life. Does my right hon. Friend accept that, as we represent Motorola and the paper industry, which are desperate to enter a single currency, there are two views in the party on that subject?

Mrs. Dunwoody: At the very least.

Mrs. Beckett: My hon. Friend anticipates me. I was about to say that there are at least two views. I understand that there are particular industries where there is urgent pressure and a great desire for Britain to be an early participant in the euro and that, in other industries, the pressure exists without the same force. I can only repeat to my hon. Friend the Member for Linlithgow (Mr. Dalyell) what I said to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), which is that the Government believe that the decision should be made by Parliament and the British people, only when it is believed to be in Britain's interests to enter a developing euro.

Dr. Ladyman: Does my right hon. Friend agree that, whether or not we ultimately enter the European currency, our motivation for economic policy should be the same? Our need for a stable competitive currency rate and stable low interest and inflation rates will be identical, whether or not we intend ultimately to enter the euro.

Mrs. Beckett: My hon. Friend is entirely right—those factors are in the interests of the British economy, and they are policies that the Government seek sustainably to pursue.
Before we embarked on an interesting diversion, I was talking about the possibility of lower interest rates and how they might impinge on sterling. Before I leave that point, it is right to remind the House that two thirds of the increase in sterling against the deutschmark occurred before the general election. That means that it was in no way the responsibility of this Government, and that it took place before interest rates had begun their recent rise, so it calls into question the suggestion that present exchange rates are fuelled solely by interest rate levels. The lesson, under Governments of either party, of politically driven exchange rate interventions is that it can have an effect, but that it is not necessarily or solely the one wanted or imagined.
The right hon. Member for Wokingham said that the problem was the pressure on savings, and talked as though an unprecedented decline in savings was exacerbating the problem. As I am sure he knows, that is nonsense. The savings ratio is running at some 9 per cent., which is near its long-run average and nowhere near the levels to which it fell under the Government of which the right hon. Gentleman was a member in 1988, when savings fell to 6 per cent. That is not relevant to the difficulties that some sections of manufacturing—it is not universal—may be facing.
The Government are not prepared to run risks or play games with the economy. We put control of interest rates in the hands of the Bank of England to signal that. Little could be more damaging to confidence than to reverse that policy, as some Conservative Members appear to demand.
Our extensive consultations with the business community before the election and since have produced a short but heartfelt list of what it feels is needed from the Government. That list is headed by a demand for stability in the management of economic policy, which the business community believes will contribute to economic stability. It also calls for consistency in overall policy making and for investment in skills, transport infrastructure and our science and engineering base. All that was heard, and none of it was heeded, by the Conservative party when in government.
However, in the 15 months during which this Government have been in power, not only the interest rate decision but the decision to set a sound framework for prudent, consistent and long-term reform of public expenditure have laid the basis for the policy stability that the business community seeks. The evidence that that is the right course lies in the fact that long-term interest rates today stand at 5.75 per cent.—the lowest level for 33 years.

Sir Peter Tapsell: I am genuinely puzzled by the fact that Ministers repeatedly point to historically relatively low long-term interest rates as a sign of optimism, because most commentators regard them as a sign of anxiety that we are heading towards a recession. That is why long-term interest rates in Japan are only 2.5 per cent. and why, in the past six weeks, the yield from the long-term bond in America has fallen by 0.5 per cent., reflecting fears that the Asian crisis will have a knock-on effect. Low long-term interest rates are what happens when the markets think that a recession is coming.

Mrs. Beckett: I hear what the hon. Gentleman says, but I am not prepared to get into a great debate with him about the indications of low or high long-term interest rates. It is strange for him to complain that low interest rates are not a good sign, given that the motion tabled by the Conservative party complains about the threat to manufacturing as a result of the level of sterling, which, it claims, results from the level of interest rates.

Sir Peter Tapsell: I am talking about long-term interest rates.

Mrs. Beckett: Yes, I know.
As I was saying, the windfall tax, which the Conservative party opposed, has funded the start of the new deal for employment. The legislative changes being pushed through by my right hon. Friend the Secretary of State for Education and Employment and his team should foster not just more investment but higher standards from the nursery years through to higher education, which is the push to quality that Britain needs.
We are on the brink of an announcement about the outcome of the comprehensive spending review—the establishment of a three-year framework within which the Government will begin to deal with the backlog of under-investment and decay not only in education or the transport infrastructure, but in our science and engineering base. In each of those areas, an innovative approach to public-private partnership lays the foundation for modernisation and reform, which should deliver not only increased resources but better value for the investment made.
Earlier today, I announced a step change in science funding, to meet the challenge of a potential step change in scientific discovery and understanding. We believe that the human genome project has the capacity to bring about another giant change, not only in understanding, but in the implications for the quality of life, for our approach to health care and for industrial exploitation, which can flow from using the knowledge that that project will deliver.
Today, we have announced a £1.1 billion package secured over the next three years. There will be a £600 million fund for university laboratories, equipment and infrastructure, funded equally by Government and the Wellcome trust, £400 million in capital and current costs for research councils' new project funding, and a further £100 million from Wellcome towards the cost of a new high-intensity X-ray machine, not only to help keep the United Kingdom at the forefront of human genome research, but to contribute to many other research projects.
I do not suggest for a second that that money will ease the day-to-day problems that confront manufacturing companies in Britain, but it is a hugely important signal that, under the present Government, we shall not neglect that seedcorn investment on which, ultimately, our whole economy—and manufacturing in particular—depends.

Mr. Redwood: Will the Minister give way?

Mrs. Beckett: Certainly. I hope that the right hon. Gentleman can tell us that a Conservative Government would not seek to abolish such a fund.

Mr. Redwood: Has the Minister some advice for a manufacturer who, today, is looking at the figures and saying to himself, "If sterling and interest rates stay at this level or go higher for the whole of the next six months, I must close my factory, but, if there is relief in sight—if there is to be some improvement—it is worth clinging on"? Would she advise that manufacturer to cling on—or will her Government do absolutely nothing to help him?

Mrs. Beckett: Such a manufacturer will find no answer in the issues that the right hon. Gentleman has raised, most of which have no relevance whatever to him or her.
I am slightly sorry that the right hon. Gentleman could not find it in himself to be generous enough to welcome the £1.1 billion package that I have just announced for the science and engineering base. I would not attempt to second-guess the decisions that any manufacturer or industrialist must take over the next few months; all I can say to him is that, in terms of economic policy and supply side investment, the Government are laying the foundations for the type of long-term prosperity that can alone secure our economy and our manufacturing base, the neglect of which was such a feature of the Conservative party's record in office.

Mr. MacShane: Perhaps the right hon. Member for Wokingham (Mr. Redwood) has not welcomed that remarkable new statement—which, alas, there is no one in the Press Gallery to hear—for the following reason.

At page 10 of the latest Library research paper on the economy we read that, in 1997, investment in our country, expressed in gross domestic fixed capital formation,
was still 2.1 per cent. below the peak reached in 1989"—
so the period when the right hon. Gentleman sat in government was the period in which we invested nothing in our economy.

Mrs. Beckett: My hon. Friend is entirely right. That was a feature of the Conservative party's entire time in office.
The announcement that I have made today is not the only sign that the Government have given that where we can work in partnership with manufacturing, we shall. Immediately after the general election, we set up the export forum to consider what steps lay within our power as a Government to help and support Britain's exporters, especially small and medium businesses. We reinstated specific support for trade fairs and seminars threatened by the Government who left office last year. Earlier this month, we established the national exporters database. We have introduced the export explorer service, to give small firms first-hand experience of export markets. Later in the year, we shall launch the new sales leads service, which nearly 1,300 companies have already applied to join.
Moreover, directly in manufacturing, in the past 15 months we have pledged £323 million of supportive investment into Britain's aerospace industry—substantially more than the amount that flowed from the previous Government over seven whole years.
We have secured inward investment in pharmaceuticals from Pfizer, with 1,000 more scientific research jobs in Kent, and from Jaguar, Vauxhall, LDV and Honda. In all those cases, investment is bringing more quality and skilled jobs to various parts of the UK. In addition, we have seen investment in jobs in IT, particularly in the east Midlands and Glasgow. All those investments are the fruits of partnership with this Government which look to secure our economy and our employment prospects in the longer term.

Mrs. Dunwoody: Will my right hon. Friend give way?

Mrs. Beckett: I will, but, if my hon. Friend and the House will forgive me, it will be the last time, as I am almost at the end of my remarks.

Mrs. Dunwoody: I am grateful. Will my right hon. Friend look carefully at the Export Credits Guarantee Department? I know that it is a difficult area where, because of past problems with particular countries, some contracts are being lost. I understand the difficulty and the reinsurance problems, but will she undertake over a longer period to examine closely what is happening in ECGD?

Mrs. Beckett: We are taking a careful look at the scope of the operations of the Export Credits Guarantee Department. As my hon. Friend knows, it is a high-quality operation which has had great successes. I recognise that there are those who would like it to stretch its wings a little more sometimes, and I shall bear my hon. Friend's remarks in mind.
It is only natural, when people are facing particular difficulties, for them to begin to blame the Government of the day—although not, I hope, for the weather or our


sporting record, as the right hon. Member for Wokingham suggested. It is only natural for them to want the Government to do something, even though the specific action for which they call may neither identify nor address the underlying problems that they face.
It is right for a Government to take those concerns seriously and never to ignore or dismiss them, but it is also right for a Government not to take their eye off the fundamental long-term changes that, in the end are the only basis for sustainable and secure economic prosperity. That is what this Government are determined to do.
The petulance and fury displayed by the Conservative Opposition, trying to fire on all cylinders and certainly firing in all directions, adds nothing to the serious analysis or the resolution of Britain's long-term problems. They had the greatest investment opportunity in our long and sometimes glorious history, and they frittered it away buying short-term popularity at the price of continuing long-term decline. We and the House need no lectures from them. What we need is to continue to work to develop a new understanding and a new approach to making Britain more competitive. It is a task from which we will not be deflected, because it is a task in which the future of Britain requires us to succeed.

Mr. David Chidgey: I am glad that the Conservative Opposition tabled the motion. It seems that they have finally recognised that creating a boom-bust economic cycle of high interest rates and wage and price inflation is not good for the economy. They are right to point out the damage being done to manufacturing industry by an unvirtuous cycle. However, rather predictably, they have begun to lose their way in addressing the problem.
I am sure the House would agree that the present Government did not cause the situation: they inherited it. However, that is no excuse for not recognising the problems visited on manufacturing industry and for not acting to correct them. Having given the Government some credit, perhaps I am now allowed to chide them a little.
It is clear that the Government are in danger of mismanaging the economic situation that they inherited. They have yet to send a clear message to the international community that they mean business when it comes to creating stability and investing for the long term. When they presented last year's Budget, they had the opportunity to dampen consumer spending through taxation—to damp down the side of the economy that was and is overheating. That would have removed the need for the interest rate rises that have increased the cost burden of debt management right across industry.
The pound, which is proving so attractive to overseas investors because of high interest rates, and whose strength is doing to much to damage the export sector, would be lower and would be pitched at a realistic rate.

Dr. Ladyman: rose—

Mr. Chidgey: I give way to the hon. Gentleman.

Mr. Deputy Speaker (Mr. Michael J. Martin): Dr. Ladysmith.

Mr. Bercow: Dr. Ladyman.

Dr. Ladyman: Thank you. I am grateful to the hon. Member for Eastleigh (Mr. Chidgey) for giving way—to someone.
My understanding was that the Liberal party campaigned in the general election on the notion of putting 2p on income tax for various good works. Presumably the hon. Gentleman is arguing that that 2p on income tax would have dampened consumer demand sufficiently to make a significant rise in interest rates unnecessary. I would be surprised if any serious economist suggested that that would have saved more than half a percentage point on interest rates. How would the hon. Gentleman have dealt with that situation? Would he have carried on putting income tax up, beyond the 2p?

Mr. Chidgey: I share with the hon. Gentleman the problem of the mispronunciation of one's name. I often suffer from a similar problem, but I hope that he does not feel too flushed by the mispronunciation of his.

Mr. MacShane: Get on with the answer.

Mr. Chidgey: I shall indeed answer the question, as was so accurately said from a sedentary position.
The hon. Member for South Thanet (Dr. Ladyman) is wrong on several counts. He has not got his figures right with regard to our manifesto. He may not be aware of, or he may have ignored, a fully costed alternative Budget that we proposed when the Government proposed theirs. I recommend it to the hon. Gentleman. It will make interesting reading, and he may learn quite a bit from it.
The Government should have made an early commitment to join the EMU, which would have encouraged interest rates to fall, accompanied by a fall in the value of the pound. Instead, a combination of inflammatory rhetoric from the Conservative Opposition and indecision from the Government have led the pound to rise even higher.
The Government should not have adopted the self-imposed economic straitjacket of the Conservative spending limits. Taxes on consumer spending could have provided the levels of investment that are desperately needed to repair the damage that has been done to investment in education and training. The billions of pounds in surpluses that the Chancellor is building up in his war chest over the life of this Parliament could have begun the process of reskilling the work force and closing the skills gap that is doing so much to encourage wage inflation in the industrial base.

Mr. Bercow: Perhaps the hon. Gentleman will answer the question that the President of the Board of Trade ducked a few moments ago. If Dr. Tietmeyer, the president of the Bundesbank, proves to be correct, and entering the single European currency entails the cession of sovereignty over direct taxation policies, would that, for the hon. Gentleman and his party, represent a constitutional bar to joining the single currency?

Mr. Chidgey: It is the same question, and the same answer. That is a matter for the Germans to worry about. Clearly it is not the policy that we are pursuing.
Before I develop the policies for which we have long argued, I shall define the disease that is gnawing at the heart and vitals of British industry—the disease that the Conservatives failed to diagnose, let alone cure. It is widespread. It afflicts much of the British manufacturing sector. Recent announcements by some of our major


manufacturers—Rover and Vauxhall—have merely served to highlight it. It is important to reflect on the views that they put forward in the press recently.
Both companies said that they were looking to move their components subcontracting from the United Kingdom to continental suppliers, because productivity is not high enough in the UK. Subcontracting is a misnomer, because, as many hon. Members who represent manufacturing-based constituencies know, the subcontracting part of the motor industry is the major part. Press comment that our major manufacturers are to seek supplies elsewhere has a fundamental effect on the economy of those towns and those industries.
Vauxhall and Rover are seeking to move their subcontracting to continental suppliers because productivity is not high enough in the United Kingdom—compared to that of German manufacturers, who have been prepared to take a long-term view of investment in tools and machinery. British firms still seem to be more inclined to rest on their laurels in economic good times and not invest in the future. They will lose if they do not take radical action now.

Dr. Ladyman: Will the hon. Gentleman give way?

Mr. Chidgey: I shall continue, if I may. The fewer interventions there are, the more opportunities there will be for other hon. Members to speak. Hon. Members should take that on board, as this is a short debate.
Even more worrying, at the time of its announcement and since, Vauxhall has made it clear that the high value of the pound was only one element in the package. Low productivity, which is the result of industrial short-termism and unwillingness to invest, was a more serious issue. For a Government who claim that the punishingly high value of the pound and high interest rates are a result of their preparedness to pursue a long-term anti-inflationary policy, the charge of short-termism in industry is serious; for a Government who have consistently set out a vision of developing a high-skill, high-wage economy—which I agree with, and which my hon. Friends support—losing valuable jobs to continental firms is hardly an auspicious start.
The culture in Britain has to change towards investment, or more jobs will be lost and more industries will join those that were killed off by previous Conservative Governments who sat on the Treasury Bench for those long years. That change requires a long-term strategy. If Ministers were listening to what I am saying, they might reply that they have been in office for only a year and have 18 years of Tory misrule to put right. I am not blaming the Government for the culture that they have inherited, but it is clearly their responsibility to introduce policies to change it. I listened with great interest to the remarks of the President of the Board of Trade. They were encouraging, but far more needs to be done if we are to put our manufacturing industry back on a sound base.
Liberal Democrat Members have long argued that making Britain competitive is not about economic dumbing down and competing on price in world markets. We cannot do that, and neither should we want to. We share the Government's view that we should aim to

compete on quality, with the best in the world. For that reason, I look forward to the White Paper on competitiveness. I hope that it will propose realistic solutions to some of the most ingrained problems, which the Government have been elected to tackle.
It is perhaps symbolic that the Conservative Opposition decided to initiate the debate only two days before the announcement of the comprehensive spending review. The President of the Board of Trade gave us a little insight by putting her hand into the sweetie jar and pulling out a few interesting issues for us to suck on, but there is much more that we need to know. We can but hope that this long-awaited review will include a significant shift towards long-term planning in the industrial sector. The Liberal Democrats will judge the review on how much increased investment in education and training is provided. I know the battles that go on.

Mr. Brian Cotter: Does my hon. Friend agree that the Engineering Employers Federation recently announced that engineers were having severe problems in meeting—and, indeed, quoting for—contracts, because of the lack of skilled personnel?

Mr. Chidgey: My hon. Friend makes a telling point. Lack of skills is a major problem in industry, and I shall set out what we need to do if we are to give industry opportunities to compete effectively.
There must be much greater investment in education and training. The minimum must be the right to two days a week in education or training for everyone aged between 16 and 18, and there must be an entitlement for everyone to have a period in education or retraining to reskill, at some stage in their lives: as industry develops, technology changes and skill requirements change, so we must change our work force to fit those requirements and to ensure that we do not have another skills shortage looming over us all the time.
We need to expand our higher and further education system, and we must repair the damage that was done under the previous Administration, but that means investment in quality education, not paying lip service to it by increasing numbers for inferior courses. We need a clear commitment to invest in training. If we achieved that, we could start to tackle the skills shortage and do more to calm wage inflation than would any proposal from the Conservative Opposition. Although taking the initiative on training would help to ameliorate upward pressures on wage inflation in the medium term, the Government must also act to remove some of the short-term pressure for further rises in interest rates.
There has been an interesting discussion between Labour and Conservative Members about how important or unimportant it might be for us to join the European single currency; however, let us consider the facts and what is happening in manufacturing industry. Hon. Members really must do something: the most recent survey by the Engineering Employers Federation suggested that, in the second quarter, the balance of engineering output declined to minus 7 per cent., the first time in five years that a negative has been recorded. That is the sharpest adverse quarter-on-quarter change ever recorded. Over the same period, the balance of export orders fell for the sixth consecutive quarter, to minus 25 per cent. The balance of domestic orders fell from plus


11 per cent. in the previous quarter to minus 12 per cent. this quarter. At the same time, employment in the sector fell by 12,000, and capital spending plans are weakening sharply, with a positive balance of only 4 per cent.
To add more information and to emphasise the point, the Institute of Directors business opinion survey for June showed that weak overseas markets are now considered by 42 per cent. of manufacturing industry to be a factor in the limiting of output, and 57 per cent. of directors cited a lack of orders and sales as the main problem. Optimism in manufacturing industry is running at minus 8 per cent., compared to plus 42 per cent. last time.
There are short-term actions that the Government can take to remove some of the pressure for further rises in interest rates. To reinforce the point, the principal action would be to dampen inflation by taxation of consumer spending to release investment for education and training.
The Conservative Opposition's motion raises concerns about industrial unrest and employee relations policy. Not only did the previous Government have some of the highest ever interest rates and inflation rates; towards the end of their term, as the President of the Board of Trade said, the trend in stoppages of work was spiralling upwards. According to Government figures, produced by the House of Commons Library, from the July labour market trends survey, 278,000 working days were lost in 1994, 415,000 were lost in 1995 and 1.3 million were lost in 1996. That compares to 235,000 days in 1997 and only 72,000 in the first quarter of this year. We know where the fault and the blame should lie.
Liberal Democrat Members believe in a constructive and engaged approach to industrial relations—from employers and employees—overseen by a Government without dogmatic attraction to one side or the other. I shall leave it to Labour Members to decide whether the Government have a dogmatic position or dogmatic attraction to one side or the other. Perhaps we shall find out in due time. Nevertheless, the Liberal Democrats broadly welcome the White Paper "Fairness at Work". We believe that the proposals offer a start to rectifying some of the wrongs done to industrial relations policy under the previous Administration. The White Paper must be developed, and we intend to focus on extending the Government's as yet unrealised promise of industrial democracy to all those at work in this country
Above all, the Government must tackle the crisis in manufacturing industry. They must give a clear commitment to the United Kingdom's entry into economic and monetary union and act to dampen down consumer spending. They must also release resources from their multi-billion pound war chest to provide the investment that is essential to closing the skills gap and to enabling industry to produce the best and compete on quality in the global marketplace.

Mr. Denis MacShane: I welcome the speech of the hon. Member for Eastleigh (Mr. Chidgey), because he is a chartered engineer, and is one of those rare beings in the House who has got his hands dirty in manufacturing.

Mr. Chidgey: I am grateful to the hon. Gentleman for giving way so early. On a point of information, not only am I a chartered civil engineer and mechanical engineer—

I have got my brains and hands dirty—but my hon. Friend the Member for Weston-super-Mare (Mr. Cotter) runs a manufacturing company. Perhaps the hon. Gentleman was not aware that we on the Liberal Democrat Benches speak with a great deal of experience.

Mr. MacShane: Even if I were not aware of that, I sense that, as so often, the only effective opposition in the House is coming not from the two Conservative Members sitting on the Back Benches, but from hon. Members from parties below the Gangway.
As a lifelong supporter of manufacturing, I am delighted that this motion has been tabled. It allows me and any other hon. Members with a shred of intellectual honesty to place in front of the House the sorry record of the Conservative Government, who undermined, weakened and scorned the needs of manufacturing. By sheer chance, on Friday night I spent three hours with a group of representative employers from my constituency, which lies at the heart of the traditional manufacturing sector in the United Kingdom economy. It was a good discussion, and I shall put some of their points and comments on the record, because I want Ministers to consider what they had to say.
This debate will continue: it is not a fixed announcement of policy. There is a crisis about what kind of a nation we want to be. The fall in the manufacturing sector of our economy, which has been accelerating in the past 20 years, needs to come to a stop and, where possible, to be reversed. We have gone through the years in which, as the former Chancellor Lord Lawson said, it did not matter how people made a pound—whether it was by trading a pound or making a product. We have gone through the years when all that counted was the weightless economy. Just look at the contents of our homes, what is on sale in our shops, and the number of cars we drive. We live in an economy that is more weighty than ever.
I hope that Britain will start to make a little more of what we and the rest of the world consume. To achieve that end, we shall need a significant change in policy.

Mr. Boswell: Would the hon. Gentleman like to comment on events since May last year? Have the Government shown a greater sympathy towards manufacturing industry or the service sector? Which of those sectors has done better during that time?

Mr. MacShane: A culture inimical to manufacturing existed not just during the 18 Tory years, but for longer. Under the present Government, 14,000 new manufacturing jobs have been created in the United Kingdom. In my constituency, British Steel is taking people on, but it cannot make a decent profit because of the value of the pound. I shall come on to that, because these points need to be raised. But the difference is that only in Britain has it been the fixed and focused policy of the Government, when in the hands of the Tories, to do down the UK-owned and managed manufacturing sector.
Manufacturing may be different from the service economy, because, perhaps more than any other sector, it requires stability to plan for the future. Last week, I went to Bournemouth. I got up early, picked up some papers at the House of Commons and walked across Westminster bridge. I had not had breakfast, so I went into a typical


part of the service sector: a cafe underneath Waterloo station. I asked for a bacon sandwich with brown bread. Two young girls were smoking and examining their fingernails. One of them eventually got up and told me that she did not have any brown bread.
I went next door to make the same request, but there was no one behind the counter—that is the service economy that the Tories created. Someone finally arrived, but there was no brown bread—bacon, yes; tea, yes; but no brown bread. I like my brown-bread bacon sandwiches.
I went into Waterloo station, where I saw a bagel stand. Three young men and women were sweating like dogs. They had six different types of bagel and a dozen different types of fillings, from Marmite to marmalade. They were working hard to produce what customers wanted. That is the service sector that Labour should be backing, and we should abolish the old Tory sector that could not provide clients with what they wanted.
Bacon sandwiches apart, cafes and bagel stands may come and go, but manufacturing requires stability in three areas: first, in the cost of its inputs and the price of its outputs; secondly, in the availability and cost of skilled labour; and thirdly, in the prospects for its markets. In the past years, we have known nothing but chronic, enduring instability in all three areas. Virtually all the present problems facing manufacturing—I do not deny that there are real problems—arise directly from the previous Government's irresponsible handling of the economy.
We may exclude the right hon. Member for Wokingham (Mr. Redwood), because he was not part of the previous Government during their last one or two years. However, before he became a Member of Parliament, he was one of the chief advisers to Mrs. Thatcher, and he participated in the culture of hostility to manufacturing that developed so strongly in the 1980s.

Mr. Redwood: I should like to correct the hon. Gentleman. I had no hostility to manufacturing then, and I do not have any now. I have been a model of consistency on this issue. The advice I gave included advice that would help manufacturing.

Mr. MacShane: The right hon. Gentleman reminds me of the general who reported back to the Roman emperor, who then said, "They created a desert and called it peace." The wipe-out of manufacturing in the 1980s—when the right hon. Gentleman was not an MP, but was an adviser to Mrs. Thatcher—is one of the industrial crimes of the century.
The real culprit, however, is not the right hon. Gentleman: it is the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who is not present. I think that it was the poet W. H. Auden who said that history sometimes forgets, but it never pardons. I do not know whether history will forget the previous Chancellor, but his party will certainly never forgive him. His flippant and irresponsible stewardship of the economy led to the Tory wipe-out at the last election.
As my right hon. Friend the President of the Board of Trade said in her excellent speech, 70 per cent. of the rise in sterling since May 1996 occurred under the Tories. The increase in the rate of money supply nearly doubled in the

last year of Tory government. Interest rates were held down deliberately to maintain a pre-election boom. Fat use that did them, because the British people are much wiser than the Conservative party. There was no serious, sustained investment in manufacturing.

Mr. Redwood: Will the hon. Gentleman give way?

Mr. MacShane: May I finish my point first? The right hon. Gentleman was more than courteous in giving way to Labour Members, so I shall repay his courtesy.
As the hon. Member for Eastleigh said, under the Tories there was no investment in training. There was a decrease in the amount of fixed capital formation—an absence of investment essential to any successful manufacturing economy. Short-termism was rampant: dividend payments were maintained at all costs, even at the expense of investment, training and jobs.

Mr. Redwood: For the sake of accuracy, I should point out that the money supply did not double in the last year of the Conservative Administration, as the hon. Gentleman suggested. Indeed, it did not double even in the last five years of that Administration.

Mr. MacShane: I am terribly sorry, but the right hon. Gentleman did not listen to me. I said that the rate of increase in the money supply nearly doubled. If he wants to check the facts, I refer him to an excellent House of Commons publication on GDP indicators.

Mr. Bercow: Will the hon. Gentleman give way?

Mr. MacShane: Perhaps the hon. Gentleman would let me make a little more progress.
I want to refer to the talks that I had with employers in Rotherham last Friday. It was a varied group of men and women. Rotherham has a combined chamber of commerce and training and enterprise council, which is also associated with the business link. One organisation represents about 75 per cent. of the employed people in Rotherham. I commend that model to other parts of the country, because it concentrates the voice of employers.
At what was, in effect, a seminar—I hope that similar meetings take place in the Treasury, the Department of Trade and Industry and, indeed, the counsels of the Opposition parties—the question was asked, should we raise taxes? I think that the hon. Member for Eastleigh suggested that we should. In fact, a number of taxes on consumption, such as insurance premium taxes and the tax on cigarettes, have gone up; but the response of those selling goods in Rotherham was, "Hang on a second: we need to maintain demand."
What about interest rates? My good friend Brett Ainsworth, who runs a metal company that has been successful on both the domestic and the international scene, said that the Chancellor, or rather the Monetary Policy Committee, should lower them by a quarter of 1 per cent. I must say that I am not entirely sure that a quarter of 1 per cent. is all that significant.
As inflation remains a worry for the men and women to whom I spoke, I asked them about the minimum wage. "We welcome it," said one hotel keeper. "It will solve the problem of the low-wage competition that has been undermining us."
One issue that bubbled up surprised me, because I do not associate South Yorkshire with the keenest of views on Europe. There was a feeling that Britain was not being clear enough, as a nation—no blame was attached to any particular Minister or party—about European monetary union. Those people respect and appreciate our Government's view that ultimate democratic control rests in the hands of the people through a referendum—and, having raised the issue in my maiden speech four years ago and subsequently written an article in The Times arguing in favour of such a course, I am wholly behind it.

Mr. Bercow: Will the hon. Gentleman give way, on that point?

Mr. MacShane: On that point, yes.

Mr. Bercow: The hon. Gentleman, who has been present throughout the debate, will know that I have twice asked a simple question, to which I have not received an answer. He has a well-deserved reputation for clarity and consistency, and also for being strongly in favour of a single currency. If, as Dr. Tietmeyer believes, the single currency involves the cession of sovereignty over direct taxation policies, is that objectionable or acceptable to the hon. Gentleman?

Mr. MacShane: If the hon. Gentleman sends me the quotation from the good Professor Tietmeyer—

Mr. Bercow: Doctor.

Mr. MacShane: All professors are doctors in Germany. It is not possible to get such a job without a doctorate.
If the hon. Gentleman sends me the quotation from the good Professor Herr Doktor Tietmeyer in the original, I will check it and send him a reply in English, if that would be helpful.
What, then, needs to be done to secure the stability that was the primary demand of the employers in manufacturing and other sectors to whom I spoke in Rotherham? I believe that the Chancellor was right to set up the Monetary Policy Committee, and I said so before the election. I think it remarkable that our country did not adopt such a course years ago, because—for social democratic Netherlands, or capitalist United States—independence for the central bank is a given. The fact that, when in power, the Opposition baulked at that decision shows their lackadaisical approach to policy making.
I would, however, like the Monetary Policy Committee to be more representative of the nation as a whole, and in particular of industry. I do not doubt the intellectual ability of its members, or their desire to serve the national interest as they vote each month on the setting of interest rates; but I see no face and hear no voice from industry, and observe little representation from the country in general outside the golden triangle of Oxford, Cambridge and Islington.
The MPC might like to hold some of its meetings in other parts of the country. It might like to come and meet the employers to whom I talked last week. Having done so, it might of course hold to its decisions—that is its affair—but those who make the decisions in the Bundesbank and the American Federal Reserve are

located in the regions and far-flung corners of those two countries, at least, and report back faithfully. I do not think that the needs of manufacturing have been reflected in the MPC' s decision.
It may well be necessary to look again at the MPC's mandates. The United States Federal Reserve is charged, under the appropriate Act of Congress, with developing a monetary policy
commensurate with the economy's long run potential to increase production, to promote the goals of maximum employment, stable prices and moderate long-term interest rates".
That is a heck of a package to discharge, but it certainly involves a bit more than the bearing down on inflation which—judging by its minutes—is the MPC's main obsession.
One reason why the American economy has been so strong in the last 10 or 12 years is the stability of interest rates, money supply and much of the value of the dollar—although it has been zig-zagging as a result, for instance, of the Asian crisis. American manufacturers have been able to borrow and sell, knowing what they will get back in a year or two—knowing the price of the money that they borrow in order to invest.
By contrast, under the Conservatives—and, frankly, Governments of the 1970s: I am sick and tired of this absurd game of ping-pong—we had a yo-yo economy. Interest rates, the value of the pound, capital formation and prices went up and down, up and down. We have been living in an Alton Towers rollercoaster economy, in which it was impossible for manufacturers to invest.
We have a real problem with pay. You were not in the Chamber at the time, Mr. Deputy Speaker, but earlier I had some fun at the expense of the shadow President of the Board of Trade and his new job with Murray Financial. He was honest, and revealed to the House that he is earning £12,000 a year in that job.

Mr. Deputy Speaker: Order. I think that Madam Speaker made a ruling on that. We must keep to the subject of the debate.

Mr. MacShane: I was actually praising the right hon. Gentleman—

Mr. Deputy Speaker: Order. There is no need to praise; just keep to the subject.

Mr. MacShane: It is the first time, Mr. Deputy Speaker, and I expect it to be the last—but, if I cannot even praise where praise is due, I will pass on.
Large pay increases awarded to themselves by those with the power to do so are having a very negative impact on pay pressure within the economy. It is impossible to open a newspaper, the Daily Mirror, The Times or The Guardian, without reading about someone somewhere—I will not go through the list—awarding themselves large pay increases detached from productivity, unit labour costs and unit prices. Until that problem is tackled, instability will continue.
I was delighted by my right hon. Friend's announcement of a £1.1 billion investment in science. I hope that lifelong learning, the university of industry and the tax incentives for research and development, which are under review, will come to fruition.
It is crucial, if we are to make a success of the manufacturing economy, never to be in the position of a Labour Chancellor some 50 years ago. When the Government of national unity collapsed in 1931, different decisions were made. Philip Snowden said, "No one ever told us we could do that." I urge Ministers to bear that in mind. We must be flexible. The last Government were not flexible, and the official Opposition have offered nothing today. I am still waiting for one speech from them that contributes anything positive to the debate.

Mr. Redwood: There were six points.

Mr. MacShane: None of those points was relevant to my constituency, or to the needs of the manufacturing economy.
I wish Ministers well. This is a huge subject. We will have to come back to it, but, if our country does not reverse the Tory years of anti-manufacturing economic policy, heaven help us all.

Sir David Madel: That was a very interesting speech. In fact, I prefer the speeches of the hon. Member for Rotherham (Mr. MacShane) to his interventions. I particularly noted his comment that, if the Monetary Policy Committee had different people on it, it might come to different decisions. Conservative Members would be less agitated if it did come to different decisions. My short speech will contain something about what the committee should do, but I could not resist starting my remarks in that way.
The motion is in two parts, and I wish to say a little about both, but, first, I wish to thank the President of the Board of Trade, her Ministers and the civil servants for the way in which they listened and acted in response to the joint appeal, from management, unions and all of us who are concerned for industry in Bedfordshire, about the future of the Vauxhall car plant in Luton. We have come through another period of great anxiety about south Bedfordshire's industrial future. If the right economic policies are pursued, because of its history of vehicle building and component manufacturing, our area can still become the Detroit of the United Kingdom, with all the economic advantages that that will bring—but it will need the right economic policies.

Mrs. Louise Ellman: Will the hon. Gentleman give way?

Sir David Madel: I have only just started, but I shall give way.

Mrs. Ellman: Will the hon. Gentleman contrast the action of the President of the Board of Trade to which he has just referred, with the action that was taken by the Opposition when they were in government? In 1993, Leyland DAF collapsed, putting at risk thousands of jobs in truck manufacture. In Lancashire, when appeals were made to the then Secretary of State for Trade and Industry, he stated that nothing could be done. However, Labour-controlled Lancashire county council's economic development agency worked with the private sector and together they invested in the successful Leyland Trucks.
Lancashire Enterprises continued to develop the 200-acre site, where there are now over 2,000 jobs in 45 manufacturing companies, none of which would have been there if anyone had paid any attention to the statements by the then Secretary of State for Trade and Industry. Will the hon. Gentleman contrast what the Conservatives did then with what—

Mr. Deputy Speaker: Order. Sir David Madel.

Sir David Madel: I could take much time in the House debating truck manufacturing, truck production and what has happened in Dunstable, where we have lost all truck production, but I will say this to the hon. Lady: I have always believed that, in 1986, if the General Motors-Leyland Trucks-Rover deal had gone ahead, which some of us wanted, there would have been a future for Dunstable in vehicle building. Alas, there is no vehicle building there now. We are trying to put that right.
One of the reasons why that deal did not go through was that some hon. Members started shrieking idiotically about the possibility of the stars and stripes appearing on the Land Rover and Range Rover bonnet. Who owns Rover now? I do not think that I shall take the argument any further. However, if the hon. Lady is talking about what should have been done about truck manufacturing and whether different policies should have been pursued, we are in agreement, especially as Dunstable was badly affected.

Mrs. Ellman: Will the hon. Gentleman give way?

Sir David Madel: I shall, but other hon. Members wish to speak. I hope that the hon. Lady will be brief.

Mrs. Ellman: rose—

Mr. Deputy Speaker: Order. The hon. Lady has to make a brief intervention.

Mrs. Ellman: The point that I am seeking to make is that, in 1993, the Government of the day refused to act, but action was taken by a Labour-controlled local authority, which resulted in the saving of truck manufacture in Lancashire and of thousands of manufacturing jobs in Lancashire and beyond.

Sir David Madel: The point that I am trying to make is that, in 1986, when there was a proposal for a General Motors-Leyland deal, the Labour Opposition kicked up a terrible row. One of the consequences was that, eventually, Dunstable lost all its truck production. I know that we have just had Wimbledon. We could say "30 all" on that. If the hon. Lady will excuse me, I must move on.
As I have been talking about Vauxhall, I wish to make one point about the speech of the hon. Member for Eastleigh (Mr. Chidgey), the Liberal Democrat spokesman. His remarks were a bit downbeat and not very encouraging about Vauxhall. Do not worry: the new Astra productivity, production and quality in Ellesmere Port are just as good as on the continent. If they were not, 1,000 extra jobs would not be going there, so I hope that the Liberal Democrats will not mislead the country on economic conditions locally. They certainly misled people in Bedfordshire in 1986.
As I said, I am grateful for the help that the President of the Board of Trade gave us on the future of the Vauxhall plant at Luton. However, I hope that she has already done a further thing to help us: I hope that she has made strong representations to the Deputy Prime Minister on the White Paper on roads, which will soon be with us. We in Dunstable and Luton urgently need certain roads for our improved infrastructure. That is vital for industry, for employment and for future employment.
I hope that, having helped over Vauxhall at Luton, the President of the Board of Trade will be able further to help us with getting those new roads built, which are vital for our local industry. We cannot have industrial and employment policy in Bedfordshire decided by the antics of Friends of the Earth. As a constituency Member of Parliament, I am here to represent my constituents and, in view of the history of my constituency and what we have been through, that means above all fighting endlessly to get a more secure employment base.
In view of what has been said, I assume that DTI Ministers are getting increasingly anxious about what is happening to the manufacturing sector and about the policies pursued by the Monetary Policy Committee. Last Friday, there were three quotations in The Times from three people who come from entirely different wings, if you like, of the political spectrum, on the present policies of the committee. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), a former Chancellor of the Exchequer, said in criticising the committee:
The way you cause bust is that you carry on tightening policy when the economy is already going down.
The Engineering Employers Federation said:
We would urge the MPC as soon as possible to signal that interest rates have peaked and that the next move will be downwards.
Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, which has many members in Bedfordshire, said:
The recession will continue until the Bank ends its war of attrition against manufacturing industry.
I agreed with quite a bit of what the hon. Member for Rotherham said about how the Monetary Policy Committee could become more involved in industry. I think that industry feels that it is simply not getting its message across to the committee. In fact, the committee might invite the President of the Board of Trade and some of her Ministers to sit in on some its meetings. It is the committee's duty to become far more heavily involved in the worries and needs of industry, and to pay far more attention to industry's view, rather than ale-house gossip in the City.
People in industry are being pushed to their absolute limits on the factory floor to secure export orders and, once they are secured, to ensure that they are delivered on time. I look to the MPC to start to work with the grain industry, rather than giving the impression of working against industry.
On industrial relations, I should like the Government to take a leaf out of our book and leave many things as they are. The change of Government was a year ago. There was a change of Government in 1951, after six years of a Labour Government. In moving the Loyal Address, the then Prime Minister, Mr. Churchill, said:
What the nation needs is several years of quiet, steady administration, if only to allow Socialist legislation to reach its full fruition."—[Official Report, 6 November 1951; Vol. 493, c. 68.]

I should like to turn that around: what the country needs is several years of quiet administration, to allow Conservative trade union legislation to reach its full fruition, rather than pulling it about and starting to change it around. This country does have greater industrial stability, and I hope that the Government will make a gesture in that way.
As my right hon. Friend the Member for Wokingham (Mr. Redwood) said, however, the motion mentions
industrial unrest in several sectors of the economy".
There is one sector in which matters have not improved but become worse in the past 12 months. From April 1997 to April 1998, just over 30 per cent. of all days lost were accounted for by stoppages in the transport, storage and communications sector, predominant recent stoppages on London Underground and Railtrack. The biggest single cause of action was pay—wage rates and earnings levels—followed by disputes over manning and works allocation.
There must be a way of achieving industrial peace in the railway industry. I cannot think of any other industry in which work conditions have improved more since the war. In 1945, the industry had steam trains, coal had to be shovelled and there were many difficulties. An enormous effort has been made to improve industrial conditions in the railways. The Government, in their heavy emphasis on greater use of public transport, are creating an atmosphere in which people entering the railway industry should be able to look forward to steady and secure employment. Somehow or other, we have to transform the atmosphere in the railway industry.
Since the war, there have been some remarkable breakthroughs in industrial relations—one of the best of which was the productivity agreements, in the 1960s, at the Fawley oil refinery, near Southampton. A whole range of improvements in that industry followed the agreements.

Mrs. Dunwoody: If the railway industry was able to offer its members the pay rates that are common in the oil industry, many railway men and women would be highly delighted with their jobs.

Sir David Madel: The hon. Lady and I have discussed the railway industry in the Select Committee on Transport, on which I was pleased to serve when she was Chairman. If I may develop the argument a little more, I think that she will see what I am getting at.
I am convinced that the railway industry and management can draw on good practice in other United Kingdom industries, to move towards better industrial relations. I am convinced that in that industry we can move, by negotiation, to single-union recognition, no-strike clauses and three-year wage agreements. Although it will not be done overnight and it cannot be forced through, there is sufficient experience in other parts of UK industry to show that it can be done, although it will take time.
I tell the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) that thousands of my constituents now depend—and even more of them will come to depend—on peace in the railway and tube industries to get to work. Jobs in the industry should become ever more secure. It is the challenge of management and unions to make industrial peace happen, and to move to the type of industrial peace that exists in many other sectors of UK industry.
One of my worries about the Government is that we have a restless Prime Minister and a restless Cabinet, always looking for things to do. That is not the best way to govern the United Kingdom. The best way to govern this country is—

Mr. MacShane: To do nothing.

Sir David Madel: No; it is to deal with matters as they arise. In this debate, we are talking about a problem that has arisen—the plight of manufacturing industry. I do not think that there are enough signs that the Government are responding positively to our worries about that industry.
I remind Labour Members that every Labour Government we have ever had left office with unemployment higher than when they took office. The way that the Government are going about matters, the same will happen again—I fear that history will repeat itself. If that happens, where will the welfare-to-work programme stand?

Dr. Stephen Ladyman: We have had an interesting debate, in which some hon. Members, including the hon. Member for South-West Bedfordshire (Sir D. Madel), seemed to argue—it is the first time that I have heard such an argument in the House—that the Government should not try to be proactive, but sit back and wait for events, to which they should react. I strongly suspect that the Government would soon be criticised by Conservative Members if they were to take that advice.
We heard an interesting speech from my hon. Friend the Member for Rotherham (Mr. MacShane), who made a powerful case on several matters—not least on brown-bread bacon sandwiches. I hasten to add that he made that case without having to resort to lobbyists or any outside agency.
The hon. Member for Eastleigh (Mr. Chidgey) made an interesting speech, on which I should like to focus for a few moments. His thesis was that the Chancellor should have raised consumer taxes to take the heat out of the economy. There is no question but that some money has to be taken out of the economy and that increasing interest rates is currently the main mechanism of doing so. One aspect of the monetarist thesis that now seems to be generally accepted is that a major factor in increasing inflation is money entering the economy more rapidly than goods to "absorb" that extra money. Consequently, the extra money has to be "sopped up" by inflation and increased prices. The hon. Gentleman therefore seemed to be agreeing with the thesis that removing money from the economy is a good way of controlling inflationary pressures.
The mistake made by the hon. Member for Eastleigh was to suggest that that extra money should be returned to the economy in immediately increased public sector spending. Such spending would not produce the downward effect on inflation that he seemed to advocate. Although he recommended that we spend the extra money on valuable projects that I agree require further investment, the economic circle could be squared only if he were to propose that we not only increase consumer taxes and spend that tax revenue on good works,

but increase interest rates—exactly as has happened—or cut public sector expenditure in other spheres. If such action was not taken, increased public sector spending would not achieve the effect on inflation that the hon. Gentleman desires. That is the fallacy in his argument.

Mr. Cotter: As my hon. Friend the Member for Eastleigh (Mr. Chidgey) has left the Chamber for a moment, I should like to defend him. We have proposed a balanced Budget, and to pick out one aspect of it without considering the others is not to consider the whole.

Dr. Ladyman: I am going only by what the hon. Member for Eastleigh said in his speech—I cannot do more than that. I confess that I have not read in great depth the Liberal Democrats' proposed Budget, but, even if it is a balanced one, without increasing interest rates it would not serve the necessary purpose of reducing inflation. The Liberal Democrats are therefore not offering any proposals to end the Chancellor's dilemma, in which—people generally agree—interest rates, and consequently the pound, are too high.

Mr. Cotter: As I said, we have a complete policy. It would be wrong to try to deal with that policy in a short intervention. However, a part of our proposals on making progress on lowering interest rates is an early single currency timetable.

Dr. Ladyman: I shall return to the single currency issue later in my speech. A belief that I have propounded many times is that in the House we could do with a lot more agnosticism about the single currency. A few hon. Members are absolutely wedded to the idea of entering it, and fewer hon. Members are wedded to the idea of never going in. I think that we need a little more open-mindedness by all hon. Members, so that we can judge what is really in the United Kingdom's best interests.
The right hon. Member for Wokingham (Mr. Redwood) has left the Chamber. I was delighted to hear his—as I said earlier in the debate—almost damascene conversion to the cause of manufacturing industry. I have absolutely no doubt from the performances that he gave on television—when he was an adviser to Margaret Thatcher, before his election in 1987, as he was beginning to climb the steps of promotion in the Conservative party—that he was not being helpful to manufacturing industry.
The quotation to which I referred in my earlier intervention was absolutely accurate. The right hon. Gentleman said that he did not consider the balance of trade significant and that it should not be used as an index of whether the economy was going in the right direction. Therefore, I am delighted that he now supports manufacturing industry.
Today's debate shows that economics is extremely complicated. As the Conservatives failed to understand that in 18 years in government, it is unlikely that they will have learned to do so after 14 months in opposition. One matter on which we all agree, but which the Conservatives appear to be trying to forget, is that at the end of the day inflation is the company killer. It kills exports and will ultimately damage the prosperity of the United Kingdom, so we have to get it out of the system.
I acknowledge some fault on behalf of the Labour party. Perhaps previous Labour Governments did not realise quickly enough the danger of inflation and the


damage that it can inflict. That failing was shared by the Conservatives for a considerable time, but at least we have grasped that now. We realise that, once inflation gets into the system, it puts prices up for ever. It cannot be reversed a few months later. However, if it is necessary to increase interest rates to get inflation out of the system, at least they can come down again. In the long term, they are less harmful than inflation. We have to set ourselves a target in respect of inflation. Deep down, that is the view of all industrialists and those in the manufacturing sector who are currently struggling.
I have received representations from manufacturers in and around my constituency about the effect of interest rates and the high pound. I share their concerns, but in the long term, inflation is what really hurts them. I believe that they share my objective of getting it out of the system.
As everyone is aware, my right hon. Friend the Chancellor of the Exchequer set up the independent Monetary Policy Committee to set interest rates. Let us speculate for a moment what would have happened if that committee did not exist. The Chancellor would have received the same data and the same advice. Presumably he would have had the same motivation as the Monetary Policy Committee, so it is likely that, at least originally, the same decisions would have been made. There might have been differences in the interpretation of the data, but broadly the same decisions would have been taken.

Sir David Madel: One hopes that the Chancellor would not do what the Monetary Policy Committee has done in every decision—it always over-corrects.

Dr. Ladyman: The hon. Gentleman is absolutely right. Perhaps the Chancellor would have done things slightly differently. In the long term, however, my fear is that, when the going got tough, the Chancellor would ultimately have done what Chancellors have always done, and under-corrected. If that was the case, he would not have increased interest rates when that was necessary. There was considerable evidence of that towards the end of the previous Government's period in office. Although there was clear information about the inflationary pressures in the economy, the Government did not increase interest rates as quickly as they should have done.

Mr. Boswell: The hon. Gentleman is making an interesting speech. Does he agree that the essential difference is that, when there is no independent Monetary Policy Committee, the Chancellor alone is responsible for those decisions both to the House and ultimately to the electorate? Under the present arrangements, the responsibilities are confused and to some extent deniable.

Dr. Ladyman: I do not accept that at all. Responsibility for decisions by the Monetary Policy Committee ultimately lies with the Government. The Government must be prepared to say, "We set up the mechanism, so we shall take responsibility for it." I do not accept the argument that responsibility is in any way diffused.
There is, however, a growing danger in respect of the Monetary Policy Committee, which I would ask the Chancellor and his ministerial colleagues to bear in mind. The committee has to focus only on the target that the

Government have given it. During various dinners and meetings, I have spoken with at least four members of the Monetary Policy Committee. They were absolutely focused on the target that the Government set them—the inflation target. That was absolutely right. They said several times, "We cannot look at other matters. We cannot consider unemployment or sterling, because we have to focus on meeting the Government's inflation target, as that is the only task that the Government have set us." Now that the Monetary Policy Committee has reached the centre of economic debate, my concern is that some of its members may now try to act as quasi-Chancellors, by making political judgments and considering economic factors other than the target that the Government have set them.
Let me use an analogy. I was once given a flying lesson as a birthday present. When the aeroplane was coming in to land, the instructor explained the process of getting back down to terra firma without an almighty bang. Basically, one has to set the flaps and prepare the aeroplane for landing before slowly reducing speed. At the same time, one has to adjust the position of the nose of the aeroplane so that it remains level. He said, "It is very complicated doing everything at the same time, so I shall adjust the engine speed while you keep the nose of the aeroplane up. You focus on doing that." Because he had taken the other factors off my shoulders, I was able to focus on that one task, so the aeroplane landed safely.
In many ways, the Government have reached exactly that arrangement with the Monetary Policy Committee. They have set the target. The Government have taken the political and economic decision that inflation should be 2.5 per cent. and have given the Monetary Policy Committee one tool with which to achieve that target—interest rates. So long as the Monetary Policy Committee focuses on that target, the Government will know that, by hook or by crook, the 2.5 per cent. inflation target will be met, and they will be free to concentrate on the rest of the economy. The political responsibility, however, remains with the Government as they set the target. As I said earlier, if the Monetary Policy Committee attempts to broaden its target, there will be problems if it comes into conflict with the Government.
Although there may be some short-term problems, in the long term the Government's policy will benefit manufacturing industry. Although increased interest rates and a high value of the pound may hurt in the short term, they will be worth it if they get inflation out of the system. We have to look for some short-term ways to help manufacturing industry during that process. The Government must make sure that it really is short-term pain and that it is over as quickly as possible. If the Monetary Policy Committee were in any way inclined to listen to my advice, I would encourage it to over-correct. Frankly, the quicker it is over with, the sooner interest rates will come down. We have to aim for stability.
We have had a brief debate about monetary policy and the European currency. Let me reiterate what I said in an earlier intervention. Low interest rates, low inflation and a competitive sterling are essential regardless of whether we join the European currency. I do not need to make up my mind about the euro until after the next election, when we can see what lies before us, and I justify my agnosticism on the ground that, whether one wants to enter the currency in the next five minutes—which I


believe would be foolish, given current circumstances—or whether one is determined never to enter it, the economic targets that one sets should be identical.

Mr. Cotter: Does the hon. Gentleman agree that many people think that, if we committed ourselves to joining the single currency—or if we actually joined it—we would ensure low interest rates? To be agnostic is not very realistic.

Dr. Ladyman: I do not accept the argument that interest rates would magically fall if we announced that we were going to join the single currency tomorrow. It is far more likely that sterling and interest rates would be pickled at the levels that applied when we made the announcement, and there would be no further movement. Interest rates, inflation and the value of sterling must fall before we can join the euro.
To help manufacturing industry, we need to establish stability and—to use the Prime Minister's much-vaunted expression—to end boom and bust.
We need to continue to open up markets and to encourage the European Union to take the necessary steps to bring the east into the open market, although that can be financed only through a dramatic cut in the amount that is spent on the common agricultural policy.
We should also consider the grant aid that we provide to industry. There is an anomaly in the way in which we give grants to attract new industry into the various EU countries. The EU limits the amount that Governments can put into a new project to 30 per cent. of the capital cost, but it does not limit what non-governmental organisations can put into the pot. In France, for example, local authorities, chambers of commerce and others typically put in money over and above the Government's 30 per cent. of the capital cost, in the form of free factories or tax breaks to the inward investor for the foreseeable future. That creates an unlevel playing field.
The same happens in this country. In Wales and Scotland, development agencies can put money into the pot, as that money is not considered to be direct Government funding. My constituency is 80 per cent. in Thanet, which has full assisted area status, but we still find that we cannot compete with areas that receive extra money. There would be considerable savings if the EU limited the total investment from public sources in any new enterprise to 30 per cent. of the capital cost. Alternatively, grant aid could be made available only to inward investors from outside the EU, so that EU money is not used to fund companies that move round within Europe.
We should also consider grant aid for training. The Government's proposals on training assistance and on lifelong learning, together with the additional training money from the new deal, are essential in the short term to improve manufacturing industry.
I think that I am right in saying that, in the past few months, only one significant manufacturing company has gone bankrupt in my constituency. It did so not because of the high value of sterling—it traded only within the United Kingdom—but because of its cash-flow problems, which arose because larger companies had not paid their bills on time. That is why the Government's initiative on the late payment of debt is so important.
The right hon. Member for Wokingham said that one way in which to remove money from the economy would be to encourage savings—I entirely agree, which is why I believe that the Government's proposals on individual savings accounts are so vital. However, I do not know how he squares that with the fact that he seems to be encouraging building societies to demutualise, which should be complete anathema to someone who wants to encourage savings.
We must also create a proper framework for industrial harmony. The Government's policies on the minimum wage and fairness at work are vital to that; they will allow industrialists and manufacturers to plan for the future and to organise and manage their companies appropriately. Conservative Members sometimes seem to have spent too much time in boardrooms; if they had more experience of management below the level of the boardroom, they would know the importance of good industrial relations and appropriate trade union representation in the workplace.
We must ensure that we invest in industries in which we can really win. Britain has demonstrated that it leads the world in the biological, chemical, pharmaceutical, biotechnological and information technological sectors—other countries cannot compete with us—so I congratulate my right hon. Friend the President of the Board of Trade on announcing today a further £1.1 billion for science and technology.
Far from ignoring manufacturing and the problems that have been highlighted by hon. Members on both sides of the House, the Government have done a tremendous amount to help. They do not overlook the problems that have arisen; they are working on what needs to be corrected. They have certainly done more in the past one and a quarter years than was done in most of the years of the previous Conservative Government.

Mr. Richard Page: I apologise to the House and to both Front-Bench spokesmen for being unavoidably detained and unable to hear the opening contributions.
This debate has arisen because the Chancellor wanted to hit the ground running. He has managed the first part; he has certainly hit the ground. The problem is that, when a Chancellor hits the ground, that is not a solo performance—a few million others join him in the crash.
That is not new, of course. I remember that, when I first came to the House some 22 years ago, Lord Healey, then Chancellor of the Exchequer, had run up inflation to more than 24 per cent. The dead were unburied, the rubbish was piling up in the streets and the International Monetary Fund had to come in like the cavalry rescuing a banana republic.
To show that I have no political bias, I should add that I remember that Lord Lawson, as Chancellor, created from a budget surplus an inflationary boom. Everyone went mad borrowing and spending money, and house prices went through the roof. Unfortunately, the inevitable reckoning coincided with a world recession, which made the bite that much more savage.
Despite what Labour Members say, the previous Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), created a virtuous circle—the


economy was moving in the right direction. Growth meant more employment, which meant more Government revenue, which meant that more money could be spent on social policy, which, in turn, fed through to further growth and employment.

Mr. Sheerman: Will the hon. Gentleman give way on that point?

Mr. Page: If the hon. Gentleman can contain his enthusiasm, I will let him have his threepence worth in a few seconds.
Every single month over the past three years, unemployment has come down—until now.

Mr. Sheerman: The real critics of the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), sit not on the Government but on the Opposition Benches; indeed, many of them sit on the Front Bench. The virtuous circle to which the hon. Gentleman referred was in many ways achieved.

Mr. Page: I do not join those who criticise my right hon. and learned Friend. He attracts that criticism by his enthusiasm for the euro.
I still do not know whether the Chancellor diagnosed the problem correctly. When he took over in May, with his enthusiasm for hitting the ground running—we will have more living proof of "legislate in haste and repent at leisure"—the general view was that the problem was that there was some froth in the high street that needed restraint. Inflation was occurring not in the manufacturing sector, but in the high street.
I have no objection to monetary policy being handed over to the Bank of England, but fiscal policy should not be operated completely independently and with a set of blinkers. The aeroplane analogy of the hon. Member for South Thanet (Dr. Ladyman) was interesting, but if one puts on too much flap and reduces the throttle while trying to keep the nose up, the plane will eventually fall out of the sky, and that is exactly what is happening at the moment.

Mr. Sheerman: Oh, come on.

Mr. Page: The hon. Gentleman may disagree, but I happen to know that that is exactly what happens if one does that in an aircraft. The Chancellor's reactions last year turned a small difficulty into a major problem. The so-called windfall tax was a smash-and-grab raid on the utilities. It seems to have been forgotten that the industries that the previous Government privatised cost the taxpayer £50 million a week when they were nationalised, and that an equivalent sum started coming into the Exchequer afterwards. That is one of the reasons why the Labour Government have suddenly become such converts to certain forms of privatisation.
The Government will have to face that problem with the Post Office. I cannot see the Post Office succeeding in the modern world without being set free from the shackles of Government. If we took note of other countries' practice in introducing commercial aspects to their post offices, we might reconsider our policies.
The Chancellor showed that the Government do not really care about manufacturing industry when he hit it with advance corporation tax. At the same time, interest

rate rises were driving up the value of the pound and making it impossible for our manufacturers to compete abroad. The hon. Member for South Thanet made a couple of cracks about running businesses and Conservative Members' lack of experience. From my modicum of experience, I know that we can ask manufacturers to increase productivity by 4, 5 or 6 per cent. in a year—with effort, they can do that each year—but we cannot ask them to increase it by 30 per cent. in a single year. The extra blow to manufacturing this year has been the straw that broke the camel's back.
Hurting British manufacturers has made imports cheaper, which has contributed to the froth in the high street. If people spend more money on imports, the balance of payments suffers and it is that much harder to drive out inflation. The Bank of England has used its one stick—interest rates—time and time again. It has over-corrected, and should bring interest rates down faster than it put them up.
No one in the House would take any pleasure in the problematic state of the manufacturing sector of our economy. On that issue, we are all united. Nevertheless, despite Government Members' brave words, we can all see the worrying signs that manufacturing industry is facing serious difficulties. Output has fallen for the last two quarters for which figures have been published, and the survey to be published this week by the British Chambers of Commerce will show the severe impact of the strength of sterling on manufacturing exporters.
The Institute of Directors published a quarterly survey in June. It says:
Our March survey showed a sharp fall in export orders, capacity utilisation and expected output growth; the June survey shows further weakening in those areas, together with a dramatic downturn in business optimism.
It continues in that gloomy tone.
Manufacturers in the west midlands are feeling the effects more keenly than practically anywhere else in the United Kingdom, and proper attention should be paid by the Government and by Parliament. Manufacturers' export order books have contracted sharply, and in the north-east of England orders are at their lowest since 1990. The hundreds of job losses announced by Pringle and Barbour in the north-east in the past fortnight are, I am sorry to say, being replicated in textile firms in such places as Bradford and Scotland, and in engineering firms on the Humber.
The state of manufacturing is much better in other areas, such as the south-east, where the financial services sector is much more important, and the south-west; but even in those two regions there are recruitment bottlenecks and the first signs of a slowdown in activity. It will be surprising if Britain does not experience a prolonged period of slow economic growth and rising unemployment, whatever measures are introduced.
The consequences can easily be predicted. An unemployment rise will inevitably increase the tensions between employers, who will try to contain their costs, and employees, who will obviously want to maintain their salary levels. There will be some industrial unrest. One does not have to be Ed Balls to see that. The new culture of partnership between employer and trade union that the President of the Board of Trade commended to the House in her White Paper on fairness at work will inevitably be undermined.
I have always found it hard to understand how good industrial relations can be ensured by legislative proposals to give unions unnecessary privileges. The Government have created problems for themselves. The requirements placed on employers by their minimum wage proposals will increase wages and wage costs, if for no other reason than that people will want to maintain differentials. It will be more difficult to generate new employment opportunities.
Hon. Members on the Government Benches will have heard the general secretary of the Amalgamated Engineering and Electrical Union, Mr. Ken Jackson, call on the Bank of England to end its war of attrition against manufacturing industry, and to lower interest rates. That call has been made in the House, and it will be made many times more. The Government tell us, and will tell us again, that the economy is heading for a soft landing. I recall a former Chancellor prophesying green shoots, but they took a long time to come. It may also be some time before that soft landing occurs.
Decisions must be taken if Britain is to get back on track to sustainable long-term growth. The Chancellor of the Exchequer assured us in The Times last Friday that the right decisions had been taken. He is reverting to the type of Labour Chancellors by repeating their traditional incantation about the danger of excessive wages.

Mr. Redwood: The Government forecast a soft landing on average, which means a crash landing for manufacturing, and no landing at all for high fliers on their side.

Mr. Page: My right hon. Friend proves the point that there are lies, damned lies and statistics. Averages always mean someone is at the top, but someone else is equally far from the average at the bottom.
Incantations about the dangers of private sector wage rises unfortunately follow a rate of inflation already well above the Government's 2.5 per cent. target. Public expenditure will also increase by 2.75 per cent. on top of inflation over the next three years. and that will mean substantial growth in the burden of taxation, beyond the economy's growth rate.
The traditional features of Labour Government are high public spending that is growing faster than the economy, rising inflation, declining manufacturing and the prospect of rising unemployment. I have been through that before in the late 1970s, and I have a feeling of deja vu. I doubt that even Mr. Derek Draper—if he were ever released back on to the circuit—would be able to spin the Labour party out of that problem and the political unpopularity that will result. It would be better for the Government to admit now to the truth of my analysis, but I doubt that they will do so. I doubt, too, whether Labour Back Benchers could bring themselves to do so.
A play in the 1960s called "The Company Way" sums up the position of Labour Members, in the words:
I play it the government way. Where the government puts me, there I'll stay…I have no point of view. Whatever the government thinks, I think so too.

Mrs. Dunwoody: Author?

Mr. Sheerman: Author?

Mr. Page: Not me.
Not surprisingly, that play folded after a few weeks. Unfortunately, the Government have a few years to go, and we will all suffer from what they did in their first Budget in June 1997.
The previous Government, of which I was proud to be a member, were committed to promoting competition, to improving the quality of production and to restoring our country's national pride in manufacturing. We succeeded in raising the national level of output after 1992, and in recording significant gains in productivity, especially between 1994 and 1997. Not many hon. Members seem to understand that if the number of units on a production line is reduced by 10 per cent. or 20 per cent., profit does not drop by only that amount. Standing costs remain, and the cut in production bites into the company's success. A company that cannot keep up growth goes out of business.
A small downturn has devastating effects on companies. That is why it is necessary to have stability in the economy. Manufacturers need to plan ahead for 10 or 15 years to recoup their capital costs. Companies cannot expect an 80 per cent. jump in annual turnover to save the day. They do not make that sort of money, but deal in small percentages, and that is why stability is necessary.
When we were in government, there was, for the first time, a major growth in manufacturing exports. Our industrial relations record had never been better. Sadly, the golden legacy we left for the new Government in May 1997 has been put at risk. The difficulties being faced by the economy as a whole and by manufacturing in particular cannot be solved by some Calvinistic injunction to be good when those who make that injunction are gambling with the country.
Harry Truman, the former American President, got it right when he said that it is a recession when a neighbour loses his job, but a depression when you lose your own. For too many people in manufacturing, the recession is already here. For some Ministers, the depression is only a few days away, but for the rest, it is just a matter of time.

Mr. Barry Sheerman: I have been disappointed by some of what I have heard, particularly from the right hon. Member for Wokingham (Mr. Redwood). I was delighted when the Opposition chose to spend half a day on manufacturing. It seemed a wonderful opportunity for a serious debate about the fundamental problems of manufacturing. However, his speech dwelt wholly on the surface, scoring points and making political jibes. His analysis was very superficial—he is good at that. What irritated me most was that the fundamental problems of our country are worth talking about seriously.
The right hon. Gentleman sometimes chides people like me who represent industrial constituencies—Huddersfield is certainly an industrial constituency—for not speaking up for industrialists. The way to do that, however, is to examine changing patterns in the global economy and how our industrial and manufacturing sectors fit in. If we could dwell on that, the debate would be much more useful.

Mr. Redwood: I hope that the hon. Gentleman will recollect that I set out a six-point programme to improve


matters for manufacturers. Does he agree that, unless something is done pretty soon about interest rates and exchange rates, a lot more manufacturing will close?

Mr. Sheerman: The right hon. Gentleman knows that we must deal with global economic problems. Unprecedented change has occurred in the world economy over the past five years. Sometimes, I hear Alistair Cooke, now in his 80s, on my radio on a Sunday morning giving his in-depth analysis of the global economy and its effects on the United States and Europe. He is a man of great experience who is capable of squeezing into eight minutes—the BBC, yet again, has cut him back—the core of a matter. In a recent programme, he spoke about the fact that the global economy has become a reality in his lifetime. People used to talk about it; now it is here.
The crisis in south-east Asia is wide-ranging. We can wish it away, or pretend it does not exist. We can pretend to carry on as if it were of little significance, but it is a large change in the global economy. We are still facing up to it, and there will be worse to come. The United Kingdom must be seen in that light, and in relation to other instabilities. I am pro-European and, given the right measures and proper caution, I am in principle in favour of joining the European single currency, but there is some instability in the European Union.
We face a flight from the deutschmark to the pound and the dollar. One ray of sunshine is the American economy, whose tenacity and vibrancy is coupled with the ability to reinvent itself. We must learn some lessons from the American example and consider our economy in the context of real changes throughout the world.
I am something of an historian, so I must return to what I regard as a seminal work in terms of how we view British manufacturing and industry. In 1993, the London business school and IBM produced a consultancy report entitled "The True State of British Industry". That report changed everyone's mind about the state of British business. Until then, many people had thought that British business was pretty damn good and that we should continue to do what we had always done. Bad times were blamed on inflation, the exchange rate and many other factors, and the consensus was that there was nothing really wrong with British business and management.
Using a set of criteria, "The True State of British Industry" presented the facts. It revealed that between 1 per cent. and 1.5 per cent. of British companies were world class and that, if superhuman efforts were expended, 38 per cent. of British companies could become world class. That meant a hell of a lot of changes. According to the report, 60 per cent. of British industry was hardly saveable. It predicted that most companies would disappear and no longer be real players in the British economy.
That seminal work changed hearts and minds in the Conservative party, in the Labour party and in British business. As President of the Board of Trade, the former Deputy Prime Minister, the right hon. Member for Henley (Mr. Heseltine), produced competitiveness White Papers that attempted to address those problems. The way in which the Labour party regarded business and the problems facing it changed totally. The report probably changed the Liberal Democrats also—although I know less about their thinking. It changed us all, and so it should.
At the same time, there were other changes in management. The Royal Society for the Encouragement of Arts, Manufactures and Commerce, of which many of us are fellows, took up the challenge. Some 25 chief executives and chairmen of blue-chip companies spent two and a half years analysing what constituted a "tomorrow's company": a company that would survive into the next century and beyond while remaining a vigorous player. Many of the great companies that were listed in "Fortune" 500 a year ago, are no longer there. They have not survived: they have been taken over or gone out of business. The "tomorrow's company" philosophy and tool kit was extremely valuable because it represented an attempt to learn lessons from world-class companies so that the nation could start addressing the problems.
Five years later, the British manufacturing economy has not come to terms with that challenge. There have been some improvements, but not enough. I was slightly amused by the comments by my old friend the hon. Member for South-West Hertfordshire (Mr. Page)—we have been on opposing sides for so long that I think of him as a friend; although not an hon. Friend—who said that the previous Government increased exports. If someone devalues the currency by 30 per cent. and does not improve manufacturing export performance, God help us. Yet that is what occurred.
Manufacturing benefited from coming out of the exchange rate mechanism and from a massive devaluation. British business had a very cosy time—in fact, it was a bit too cosy. British companies did not have the urge to change into more efficient and productive industries. When the German economy was faced with a highly valued deutschmark, business used the time to retain and expand its market share by examining the quality of management and over-all manufacturing capacity. German manufacturing increased productivity in circumstances similar to those we face at present, and improved its market share.

Mr. Page: I agree with much of what the hon. Gentleman has said. However, does he accept that, the last time there was a devaluation, we started to fight our way back in volumes of sales and in growth of manufacturing exports and productivity? We did not look to devalue our way out of the crisis, as we had done time after time. Last time, it was different: we cracked the failings of the past and embarked upon a virtuous cycle. A Government reshuffle is imminent, and I hope that the hon. Gentleman's manufacturing expertise is recognised with a place on the Front Bench.

Mr. Sheerman: I shall respond not to the second but to the first point. The hon. Gentleman raises some interesting issues. I thought that he was arguing against an independent central bank. The fact of the matter is—let us not be party political about this—that Britain's record, under all parties, in handling its currency has been a disgrace. We got into trouble with high long-term interest rates because we did not have a bank and a currency that we could trust. Rather than take tough decisions on the economy, every Government devalued the currency. That was true of both major parties in government.
In the first few days of this Administration, the Chancellor took the bold and imaginative step of ending all that. He sought to ensure that we have a currency that


people can trust. I remember visiting the Bank of England three or four years ago and I was amazed when the Governor, Eddie George, said, "Until we came out of the ERM, the Bank of England didn't have a vision statement; we just did what we did. Afterwards, we produced a vision statement that said that we should have a sound currency, low inflation and a climate in which business can thrive." I assume that the Bank of England has retained that vision statement.

Mr. Redwood: Does the hon. Gentleman agree that the technicians have won and the Bank has had its way on two occasions in the 20th century: first, in relation to the gold standard; and, secondly, in relation to ERM? Those moves ended in massive job losses and manufacturing haemorrhage. Is the hon. Gentleman at all concerned that the current experiment might end the same way?

Mr. Sheerman: When I hear the right hon. Gentleman speak, I am often reminded of my right hon. Friend the Member for Chesterfield (Mr. Benn), who is an expert at plucking two dates from history and making an historical case. That is the worst sort of historical analysis. The right hon. Gentleman is just like my right hon. Friend, although he does not write or speak so much about historical subjects. One cannot conduct an analysis in that way. We must analyse what has happened to our currency, and trust in that currency over a long period.
I have recently been described in several columns as a "parliamentary poodle"—I have never viewed myself in that way—but that is one decision that I believe is good for the economy. The vision statement of the Bank of England must be correct: businesses seek security. They want to know that they are operating in a stable environment. We have not had that in this country for a long time. Stability counts; it is crucial.

Sir David Madel: I have listened carefully to the hon. Gentleman's comments. There is no stability for industry if interest rates continue to rise when they should not. That does not do anything for industry.

Mr. Sheerman: I am not going to speak much longer, but I intervened on the right hon. Member for Wokingham on interest rates, for which I have figures back to 1950. We are still in a very low interest economy compared with most of the time under the Administrations of which he was part, when they reached 11, 13 and 14 per cent. The only time that interest rates have neared present levels was in the almighty recession of the early 1990s. The tragedy is that we have been a high-interest economy. That has been a tax all the time on my industrialists in Huddersfield and on our manufacturing sector.
We must achieve long-term low inflation and low interest. That is the secret. That is what Germany and the United States are better at. Looking at our motion, that is exactly what is crucial. It is sometimes tough and I feel terribly sorry about that. This morning, I was at John Brierley, a 100-year-old cotton spinning company in my constituency. It is finding it tough and I have every sympathy, but our motion is about securing our economy for the long term. Too many politicians in this country have been obsessed with the short term. The Tories do not like it because we have gone for the long term.

Sometimes it hurts in the short term to get it right in the long term. That is why I shall support the Government in the Lobby and why I think overall that the pattern set now is right for British industry and manufacturing.

Mr. Tim Boswell: This is a serious issue which Members of Parliament do not treat at one remove. Many of us have personally experienced the consequences of six hikes in interest rates and the inconvenience of getting to work through tube strikes. Those of us who remember the winter of discontent—I often remind myself that not all of us now remember it, even in this place—look out on this rather drenched summer, for which I do not blame the Government, and see the signs of a strong and growing industrial El Niño effect, for which I do blame them. The debate has been eloquent in showing the widespread concern about manufacturing industry. That says a lot, even if our prescriptions differ on how to deal with it.
I and many other Conservative Members have a strong commitment to raising our competitiveness through better education and training, to the practice of good industrial relations and to the success of manufacturing industry. My right hon. Friend the Member for Wokingham (Mr. Redwood) and others deployed powerful arguments. Several of my right hon. and hon. Friends have distinguished records on the subject.
It is interesting that new Labour has been rather absent from the debate and unable to say how well things were going. [Interruption.] It appears to be getting its messages now. Whereas until recently new Labour has been in denial, the argument that it is all the fault of the last 18 years of Conservative government is rapidly running out of road. The time is coming when the Labour Government will have to stand up and be counted and be accountable for their actions in respect of manufacturing.

Mr. MacShane: Does the hon. Gentleman recall an Opposition day debate this Parliament that was so poorly attended by Conservative Back Benchers?

Mr. Boswell: I recall that many of my hon. Friends were here for the introduction of my right hon. Friend the Member for Wokingham. I have the impression that many others—not, of course, because of my contribution—are hurrying to the Chamber even now.
I want to talk not so much about manufacturing industry as about industrial relations. My right hon. Friend the Member for Wokingham made some telling points about the problems. The hon. Member for Eastleigh (Mr. Chidgey) referred extensively in his interesting speech to the problems of the engineering industry. He took the words out of my mouth on that, so I confine myself to noting that hon. Member for Rugby and Kenilworth (Mr. King) and I met the Minister for Science, Energy and Industry to discuss problems in the large power generation plant industry that affect employment in my constituency. Those are not the only problems.
In a letter to me enclosing its business survey, the Institute of Directors refers to
a dramatic collapse in business optimism",


with an especially abrupt fall in the manufacturing industry. The 3Is barometer survey of business confidence is at its lowest level since 1992. "Office World" is often quoted by DTI Ministers. Its quarterly small business survey announces:
Warning signs from small businesses—Government's honeymoon over".
Professor Robert Blackburn heads the small business research centre at Kingston university. He concludes: "The signs are ominous."
The question before the House is what is the sensible action for a responsible Government at such a time. We understand that macro-economic management is difficult—as many hon. Members have conceded, it has been difficult for Governments of all colours—but what do we do about it, given that it is difficult? There are undoubted problems. Should not we be doing everything possible to avoid heaping greater burdens on industry? Such burdens might arise through taxation, additional regulation or industrial action frustrating management. The three together are increasingly adding up to a noxious brew.
The Chancellor of the Exchequer warns companies about their earnings record while imposing a cool £25 billion of extra taxation over the Parliament on business alone. The Monetary Policy Committee is in agonies trying to balance its inflation targets with the consequences for manufacturing industry in particular. Businesses and trade unions, well aware of the likely score, are trying to get their retaliation in first. That is well exemplified by the industrial strain in London Transport today.
On industrial strain, we had some revealing figures in the exchanges with the President of the Board of Trade. She is not here to answer the point, but she sought, somewhat disingenuously, to compare a series of figures about our record in the 1980s with figures that I gave on the Labour record in the 1970s. What is incontestable is that industrial relations are very much better than they were when the last Labour Government left office. That is well shown by the fact that, in 1979, 29 million days were lost; by 1994—the figures are little worse now—only 1 per cent. of that number were lost. I am delighted that we are on the verge of solving the industrial relations problem. The question is whether the Government's proposals help or hinder the process. In almost every respect, they are likely to make matters considerably worse.
Let us kick off with the minimum wage, which, as the Minister knows, has been extensively debated. At least we now have the report of the Low Pay Commission. There is the interesting question of the impact of the minimum wage on business costs. The commission estimates the direct impact at 0.6 per cent. To that must be added the entirely unquantified impact on differentials, which may not be too great because of the figure chosen, which has been further doctored down by the Chancellor because of the concern that he raised in his arguments with the DTI.
Be that as it may, the minimum wage is not the only leg of the stool, because we go on to "Fairness at Work", which the Minister, in fairness, sees as a major part of his proposals. We have had the recognition debate, and we found that the Confederation of British Industry had got its way on the 40 per cent. hurdle, but there had to be many concessions, and, even at 40 per cent., there is still plenty of leverage for those who want to make disputes to ensure that they happen.
Perhaps more serious than the recognition figure is the impact of the unfair dismissal proposals. In particular, I draw the House's attention to the fact that it is likely to poke up the route of recourse through employment tribunal on grounds of unfair dismissal with no limit on damages, in comparison with a more legally based claim of wrongful dismissal, which is confined to the contract term.
Finally, there are several interesting and important issues relating to representation that the Government have not properly addressed. For example, it is even possible to allow for a disaffected employee to drag in the representative of one trade union when another trade union is recognised. That will increase the possibility of inter-union disputes like those of the 1970s, which we had thought we could now forget.
My first criticism of the change that is taking place is that it is all about litigation and using litigation for recourse, rather than being in line with the spirit of the all-party approved private Member's legislation to resolve disputes, wherever possible, by consensus, arbitration or agreement.
Secondly—as I warned the Minister of State—I was staggered when I engaged in correspondence with him and asked, innocently enough, what the compliance costs were of his proposals on "Fairness at Work", but, so far, answer have I none at all. We shall have to continue asking.
As if the minimum wage and "Fairness at Work" were not enough, there are several other measures in the pipeline. There is the implementation of the working time directive, which is supposed to be introduced on 1 October. There is a slight problem, in that the regulations have not been published. How can firms be expected to comply with, to implement or to prepare to implement regulations that are not yet in existence if they do not know what they are to contain?
Above and beyond that, there is the implementation of an avalanche of European directives, some arising out of the social chapter, including those relating to works councils, parental leave, and part-time working, and the revision of the assured rights directive. Together, those all lead in one direction: they offer rights without further responsibilities, impose further costs on business and, therefore, concomitantly reduce employment opportunities. Taken together, they are bad news for business.
Yesterday, I visited an important showcase for British industry, the Silverstone grand prix circuit, which is shared between my constituency and that of my hon. Friend the Member for Buckingham (Mr. Bercow), although mine contains the grandstand, the start, the finish and the pits. I mention it not only because it is a remarkable example of what this country can achieve through its inventiveness, but because it is an analogy for competition. There is a range of grand prix cars which, to my untutored eye, all look the same; they may be painted rather differently, but they all have multiple and complex names and they all go extremely fast—far faster than I would choose to go. The actual difference between them in terms of performance is only 1 or 2 per cent., but that is everything; that is what the whole industry is based on. If we want to be competitive, it is no good saying, "We can take a little rubbish from 'Fairness at Work' and a few extra costs in taxation," because those small things can silt up the whole process and choke it.
The President of the Board of Trade, who has now rejoined us, is deemed to be irrelevant by some of her colleagues, so we can leave her out of the analogy. However, when I consider the position of the Prime Minister and the Chancellor of the Exchequer and which analogy I should apply to their attitude to British industry, I am drawn irresistibly to that of the oysters in "The Walrus and the Carpenter", or, to bring it up to date in new Labour speak, the plumber and the leaker, whichever is which. The House will recall that
the Walrus said:
'I deeply sympathise.'…
But answer came there none";
as the House will remember, the reason was,
They'd eaten every one
We do not believe that the situation of British industry and manufacturing industry is irredeemable. Tonight, we are trying to save the Government from the follies of their own policies. In an effort to do so, we have tabled our motion and we shall press it to a Division.

The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): First, I thank my hon. Friends the Members for Rotherham (Mr. MacShane), for South Thanet (Dr. Ladyman) and for Huddersfield (Mr. Sheerman) for both the content of their speeches and the enthusiasm for Government policy that they expressed.
I understand that, on the right occasion, the right hon. Member for Wokingham (Mr. Redwood) enjoys a Big Mac. Let me tell him that I am one Big Mac that he will not be devouring tonight. His speech evoked a sense of deja vu; one would have thought that the Conservative crew had never been in government, or left an inheritance for Labour to clear up.
Under the Conservatives' tutelage and during their period of responsibility, 2.5 million manufacturing jobs were lost. They discouraged investment in manufacturing, to the extent that investment grew by only 0.5 per cent. per annum. The value of manufacturing imports exceeded that of exports by more than £100 billion. Among manufacturing companies, insolvencies quadrupled under the previous Government. Like the electorate, industry wants an end to those disastrous policies. It wants an end to instability, which our policies are designed to achieve.
Today, Dun and Bradstreet reported that manufacturers now expect a growth in sales, orders, profits and employment; that is a radically different view from that expressed by Conservative Members. The Institute of Directors reports three quarters of manufacturers performing well or very well. More than twice as many manufacturers expect to increase investment as expect to cut it. That is not a sign of a Government's policies in crisis. Many other independent forecasters, including the Confederation of British Industry, expect manufacturing output to grow both this year and next.
The Opposition have tabled a spurious motion on recession and a crisis in employment relations. The right hon. Member for Wokingham has been unable to give a single, sustainable, fact-based argument that the problems that the Labour Government are now tackling are not the legacy left by him and his right hon. Friends.
The right hon. Gentleman has a bit of a reputation for economic forecasting. In 1989, he said:
all about us there is manifold evidence of growth in prosperity, capital investment, and the like."—[Official Report, 12 January 1989; Vol. 144, c. 1072.]
Within in a year, we had embarked on the longest recession for 50 years. Two days earlier, in a similar debate, he had gone one better by saying:
About one third of the unemployed in Britain are in London, the south-east and East Anglia, and in all those parts of the country it is possible to find a job. One has only to walk down the high street to see the jobs on offer. They almost fall out of the shops."—[Official Report, 10 January 1989; Vol. 144, c. 748.]
Within four years of that remark, unemployment had risen from 1.8 million to 3 million. Economic forecasting is not one of the right hon. Gentleman's strongest skills. He apologised for the 1990s, but, like some Rip van Winkle, he appears to have forgotten that the Conservative Government were in control of the economy during the 1980s as well. I hope that he does not mind my saying that he debates economic issues as effectively as he sings the Welsh national anthem.

Mr. Redwood: To say that there are many jobs available at a particular time is not to make a forecast for four years hence. What has the Minister to say about the headline of the "Business Day" section in the Evening Standard tonight, which says:
Rid us of Beckett and restore morale at the DTI"?
The article contains a long catalogue of complaints about ineptitude, inadequacy and failure to make decisions that business needs. Will the Minister get in touch with business and understand that there is a serious crisis?

Mr. McCartney: The right hon. Gentleman should stop overdosing on Viagra. He is over-excited. One point is absolutely certain—my right hon. Friend the President of the Board of Trade and other Ministers in the Department have proved since the first day of this Government that we are effective not only individually but collectively. We are one of the best Departments in the Government. Under the previous Government, job insecurity was rife, but I can assure the right hon. Gentleman that my right hon. Friend and I do not suffer from it.
The right hon. Gentleman alleged that we had made a £25 billion tax raid on companies. The Government will cut corporate tax bills by £4.5 billion, and we have cut corporation tax by a full 3 per cent. That is the lowest ever rate in the UK and the lowest of any major industrialised country. We have cut corporation tax twice and increased capital allowances for small firms; we have cut capital gains tax on long-term investment; we have cut taxes for working families on low incomes; we have cut national insurance contributions on employment; we have cut VAT on fuel from 8 per cent. to 5 per cent.
The election of a Labour Government has prevented further Tory tax increases such as VAT on food, children's clothes, books, newspapers and fares.

Mr. Redwood: Will the Minister give way?

Mr. McCartney: The right hon. Gentleman should quit while he is ahead, but I shall give way.

Mr. Redwood: If the Government have made all those cuts in business taxes, why does the Chancellor's Red Book show a £25,000 million increase in the business tax burden?

Mr. McCartney: That is related to growth in the economy. The Government are directly reducing taxes for business.
I shall concede one point to the right hon. Gentleman: the Government have introduced one tax—the windfall tax—and I am proud of that. The previous Government allowed privatised utilities to make bumper profits while unemployment among young people and older workers increased to the point at which there was mass unemployment everywhere in Britain. We introduced a windfall tax to fund the new deal. I am proud of that, and the public are proud of it. The new deal is seen as one of the most successful programmes for introducing, at last, training and work opportunities for young people and older workers. The previous Government abandoned them year after year.
The hon. Member for Daventry (Mr. Boswell) spoke about employment relations. Looking back at the inheritance that we received when we came into office, we can see that, shamefully, under the previous Government, the International Labour Organisation listed the UK, along with Burma, as a country that was imposing limitations on workers' rights to the extent that we were not complying with our international obligations—Burma, I ask you. That is a regime known for its cruelty to all its citizens. We were bracketed with that country for our lack of compliance with ILO conventions.
The previous Government abolished wages councils, denying more than 2 million workers protection against poverty pay. They burdened the tribunal system with huge delays because of the increasing number of people who felt that they had been unfairly treated in the workplace. They systematically failed to work with trade unions and listen to their views.
The previous Government were even taken to the European Court. The former Home Secretary, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), had a record as long as his arm of losing cases in the European Court for denying British people their rights. The man was a scandal and, if it had not been for the election, he would probably have been locked up because of his long record of failure to comply with the law.
Believe it or not, the previous Government went to court and lost because they did not want the lowest-paid workers in Britain to have three weeks' paid holiday—four weeks by the turn of the century. That is the previous Government's record, which we had to follow.
The hon. Member for Daventry raised the issue of today's rail strikes. The previous Government lost almost 900,000 working days in transport and communications in their last year of office. None of us wants strikes. The whole purpose of partnership is to reduce conflict in the workplace. The previous Government had a clear record of policies that led to substantial numbers of days being lost through industrial action in the rail industry.

Mr. Boswell: Will the Minister tell the House whether the rail union is today striking against the policies of the previous Conservative Government or those of the present Labour Government?

Mr. McCartney: The position is clear—the hon. Gentleman left us a legacy of under-investment, poor industrial relations and a demoralised work force. It has been left to this Government to start investing to clear up the results of their policies.
Opposition Members do not believe in partnership, but they are very isolated. Even Sir Stanley Kalms, the Tory party's biggest fund raiser, announced last week a recognition arrangement between his company and the Amalgamated Engineering and Electrical Union. Levi Strauss, United Distillers, PowerGen, Tesco and Lucas are all making similar moves. Across Britain, employers are moving towards partnership and fairness in the workplace. Only the Conservatives, wedded to the past of undercutting and under-resourcing people in the workplace, do not believe in partnership and a joint approach to solving employment problems. They do not believe in trade unions having the right to exist in the workplace. They do not believe that unions are good for partnership.
Our White Paper has pledged funds to contribute to the training of managers and employee representatives to assist and develop partnerships at work. My right hon. Friend the Secretary of State for Education and Employment announced a £2 million fund for union learning to support innovation in promoting learning and skills at work and to stimulate new partnerships. Would the Conservative party reverse that policy? Would it repeal the "Fairness at Work" White Paper proposals for funds to improve training and education in partnership for managers and employees? Would the right hon. Member for Wokingham withdraw funding for better relationships in the workplace? Would he repeal the proposals to give people the right to paid holidays? If he opposes those proposals, will he state whether the Conservatives, if they ever won an election, would repeal those new rights?
People are sick and tired of the Tories' old agenda. They want to move towards partnership in the workplace. That is why "Fairness at Work" has been overwhelmingly accepted. The right hon. Member for Wokingham has been waxing lyrical about why, even now, he opposes a minimum wage of £3.60, but he had to admit, under pressure, that he has a part-time job paying £12,000. Will he confirm that he has also been given 100,000 share options for a part-time job? He opposes a national minimum wage of just over £7,000 for someone who is working full time. He is guilty of double standards and hypocrisy.
We need no lessons from the right hon. Gentleman about the importance of establishing a minimum wage. Will he fight the next election on wage cuts by pledging to remove the right to a national minimum wage? I am giving the right hon. Gentleman the opportunity to answer. Will he oppose the continuation of the national minimum wage at the next election, possibly forcing wage cuts on many low-paid workers?

Mr. Redwood: The Minister has often asked that, and I have always given him a clear answer. We shall review all Labour's measures just before the next election and decide what is right for this country in the interests of more people having opportunities and jobs. We are not against decent wages; we are against people losing their jobs through ill-thought-out legislation.

Mr. McCartney: The right hon. Gentleman's reply is very interesting. All women workers in Britain now understand that the Conservative party will review their new rights as part-time workers, their rights to parental leave and their improved maternity rights. The right hon.


Gentleman's statement shows that, by the next election, the Conservatives will have learnt nothing from the previous election, and that they are prepared to undermine people's entitlements in the workplace. Every worker in Britain—all 25 million of them—should realise that, at the next election, the Conservatives' policy will be to remove the entitlements and rights that were given by this Government. That is a disgraceful position for the Conservatives to place themselves in.
We have said in our White Paper that we shall reduce from two years to one year the qualifying time for protection against unfair dismissal. Will the right hon. Gentleman say whether he intends to remove that right and return the qualifying time to two years? Does he accept that, under the previous Government's proposals, many workers were undermined by their employers and could not gain access to arrangements to prevent them from being treated unfairly in the workplace? Does he intend to reverse our decision, which has been accepted by the overwhelming majority of British industry? Will he be isolated again and fight the election on the basis that workers will be able to be undermined by unfair practice in the workplace?
In The House magazine of 19 December, the right hon. Gentleman said:
I knew that in the end I wanted to be able to make my own statements and live and die by my own remarks.
By his own remarks today, he has died a thousand deaths. Let us make sure that we give him a decent burial in the Lobby and reject the motion.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 134, Noes 313.

Division No. 333]
[7 PM


AYES


Ainsworth, Peter (E Surrey)
Davis, Rt Hon David (Haltemprice)


Amess, David
Day, Stephen


Ancram, Rt Hon Michael
Duncan, Alan


Arbuthnot, James
Duncan Smith, Iain


Atkinson, Peter (Hexham)
Emery, Rt Hon Sir Peter


Baldry, Tony
Faber, David


Bercow, John
Fabricant, Michael


Beresford, Sir Paul
Fallon, Michael


Blunt, Crispin
Flight, Howard


Boswell, Tim
Forth, Rt Hon Eric


Bottomley, Peter (Worthing W)
Fowler, Rt Hon Sir Norman


Bottomley, Rt Hon Mrs Virginia
Fox, Dr Liam


Brady, Graham
Gale, Roger


Brazier, Julian
Garnier, Edward


Brooke, Rt Hon Peter
Gibb, Nick


Browning, Mrs Angela
Gill, Christopher


Bruce, Ian (S Dorset)
Gillan, Mrs Cheryl


Butterfill, John
Goodlad, Rt Hon Sir Alastair


Chapman, Sir Sydney (Chipping Barnet)
Gray, James



Green, Damian


Chope, Christopher
Greenway, John


Clark, Rt Hon Alan (Kensington)
Grieve, Dominic


Clarke, Rt Hon Kenneth (Rushcliffe)
Gummer, Rt Hon John



Hague, Rt Hon William


Clifton-Brown, Geoffrey
Hamilton, Rt Hon Sir Archie


Colvin, Michael
Hammond, Philip


Cormack, Sir Patrick
Hawkins, Nick


Cran, James
Hayes, John


Curry, Rt Hon David
Heald, Oliver


Davies, Quentin (Grantham)
Heathcoat-Amory, Rt Hon David





Hogg, Rt Hon Douglas
Prior, David


Horam, John
Randall, John


Howard, Rt Hon Michael
Redwood, Rt Hon John


Hunter, Andrew
Robathan, Andrew


Jack, Rt Hon Michael
Roe, Mrs Marion (Broxbourne)


Jackson, Robert (Wantage)
Rowe, Andrew (Faversham)


Jenkin, Bernard
Ruffley, David


Johnson Smith, Rt Hon Sir Geoffrey
St Aubyn, Nick



Sayeed, Jonathan


Key, Robert
Shephard, Rt Hon Mrs Gillian


King, Rt Hon Tom (Bridgwater)
Simpson, Keith (Mid-Norfolk)


Kirkbride, Miss Julie
Soames, Nicholas


Laing, Mrs Eleanor
Spelman, Mrs Caroline


Lait, Mrs Jacqui
Spicer, Sir Michael


Leigh, Edward
Stanley, Rt Hon Sir John


Letwin, Oliver
Steen, Anthony


Lewis, Dr Julian (New Forest E)
Streeter, Gary


Lidington, David
Syms, Robert


Lloyd, Rt Hon Sir Peter (Fareham)
Tapsell, Sir Peter


Loughton, Tim
Taylor, Rt Hon John D (Strangford)


Luff, Peter
Townend, John


Lyell, Rt Hon Sir Nicholas
Tredinnick, David


MacGregor, Rt Hon John
Trend, Michael


McIntosh, Miss Anne
Tyrie, Andrew


MacKay, Andrew
Walter, Robert


Maclean, Rt Hon David
Wardle, Charles


McLoughlin, Patrick
Waterson, Nigel


Madel, Sir David
Wells, Bowen


Malins, Humfrey
Whitney, Sir Raymond


Maples, John
Whittingdale, John


Mates, Michael
Wilkinson, John


Maude, Rt Hon Francis
Willetts, David


Mawhinney, Rt Hon Sir Brian
Wilshire, David


May, Mrs Theresa
Winterton, Mrs Ann (Congleton)


Moss, Malcolm
Winterton, Nicholas (Macclesfield)



Woodward, Shaun


Nicholls, Patrick
Young, Rt Hon Sir George


Ottaway, Richard



Page, Richard
Tellers for the Ayes:


Paice, James
Mr. John M. Taylor and


Pickles, Eric
Mr. Tim Collins.


NOES


Adams, Mrs Irene (Paisley N)
Brinton, Mrs Helen


Ainsworth, Robert (Cov'try NE)
Brown, Rt Hon Nick (Newcastle E)


Alexander, Douglas
Brown, Russell (Dumfries)


Allen, Graham
Browne, Desmond


Anderson, Donald (Swansea E)
Bruce, Malcolm (Gordon)


Anderson, Janet (Rossendale)
Burden, Richard


Armstrong, Ms Hilary
Burstow, Paul


Ashdown, Rt Hon Paddy
Byers, Stephen


Ashton, Joe
Cable, Dr Vincent


Atkins, Charlotte
Campbell, Alan (Tynemouth)


Ballard, Jackie
Campbell, Menzies (NE Fife)


Banks, Tony
Campbell, Ronnie (Blyth V)


Barron, Kevin
Campbell-Savours, Dale


Battle, John
Canavan, Dennis


Bayley, Hugh
Cann, Jamie


Beard, Nigel
Caplin, Ivor


Beckett, Rt Hon Mrs Margaret
Casale, Roger


Beith, Rt Hon A J
Caton, Martin


Bell, Martin (Tatton)
Cawsey, Ian


Benn, Rt Hon Tony
Chapman, Ben (Wirral S)


Bennett, Andrew F
Chaytor, David


Benton, Joe
Chidgey, David


Bermingham, Gerald
Chisholm, Malcolm


Best, Harold
Clapham, Michael


Betts, Clive
Clark, Rt Hon Dr David (S Shields)


Blair, Rt Hon Tony
Clarke, Charles (Norwich S)


Blears, Ms Hazel
Clarke, Rt Hon Tom (Coatbridge)


Blunkett, Rt Hon David
Clelland, David


Borrow, David
Clwyd, Ann


Bradley, Keith (Withington)
Coaker, Vernon


Bradley, Peter (The Wrekin)
Coffey, Ms Ann


Bradshaw, Ben
Cohen, Harry


Brake, Tom
Coleman, Iain






Colman, Tony
Hoon, Geoffrey


Connarty, Michael
Hope, Phil


Cook, Frank (Stockton N)
Hopkins, Kelvin


Cooper, Yvette
Howarth, Alan (Newport E)


Corbett, Robin
Howarth, George (Knowsley N)


Corbyn, Jeremy
Hoyle, Lindsay


Cotter, Brian
Hughes, Kevin (Doncaster N)


Cousins, Jim
Humble, Mrs Joan


Cox, Tom
Hurst, Alan


Cranston, Ross
Hutton, John


Crausby, David
Iddon, Dr Brian


Cryer, Mrs Ann (Keighley)
Illsley, Eric


Cryer, John (Hornchurch)
Jackson, Helen (Hillsborough)


Cummings, John
Jamieson, David


Dalyell, Tam
Johnson, Alan (Hull W & Hessle)


Darling, Rt Hon Alistair
Johnson, Miss Melanie (Welwyn Hatfield)


Darvill, Keith



Davey, Edward (Kingston)
Jones, Mrs Fiona (Newark)


Davey, Valerie (Bristol W)
Jones, Helen (Warrington N)


Davidson, Ian
Jones, Ms Jenny (Wolverh'ton SW)


Davies, Rt Hon Denzil (Llanelli)



Davies, Geraint (Croydon C)
Jowell, Ms Tessa


Dean, Mrs Janet
Keen, Alan (Feltham & Heston)


Denham, John
Keen, Ann (Brentford & Isleworth)


Dismore, Andrew
Keetch, Paul


Dobbin, Jim
Kemp, Fraser


Dobson, Rt Hon Frank
Kennedy, Jane (Wavertree)


Donohoe, Brian H
Khabra, Piara S


Doran, Frank
Kilfoyle, Peter


Drew, David
King, Andy (Rugby & Kenilworth)


Dunwoody, Mrs Gwyneth
Kingham, Ms Tess


Efford, Clive
Kirkwood, Archy


Ellman, Mrs Louise
Ladyman, Dr Stephen


Ennis, Jeff
Laxton, Bob


Etherington, Bill
Leslie, Christopher


Fearn, Ronnie
Levitt, Tom


Field, Rt Hon Frank
Liddell, Mrs Helen


Fitzpatrick, Jim
Livingstone, Ken


Follett, Barbara
Lloyd, Tony (Manchester C)


Foster, Rt Hon Derek
Lock, David


Foster, Don (Bath)
Love, Andrew


Foster, Michael Jabez (Hastings)
McAllion, John


Foster, Michael J (Worcester)
McAvoy, Thomas


Foulkes, George
McCabe, Steve


Fyfe, Maria
McCartney, Ian (Makerfield)


Galbraith, Sam
Macdonald, Calum


Gardiner, Barry
McDonnell, John


George, Bruce (Walsall S)
McFall, John


Gerrard, Neil
McIsaac, Shona


Godman, Dr Norman A
Mackinlay, Andrew


Godsiff, Roger
McLeish, Henry


Goggins, Paul
McNulty, Tony


Golding, Mrs Llin
MacShane, Denis


Gordon, Mrs Eileen
Mactaggart, Fiona


Gorrie, Donald
McWilliam, John


Grant, Bernie
Mahon, Mrs Alice


Griffiths, Jane (Reading E)
Mallaber, Judy


Griffiths, Nigel (Edinburgh S)
Mandelson, Peter


Grocott, Bruce
Marsden, Gordon (Blackpool S)


Grogan, John
Marsden, Paul (Shrewsbury)


Gunnell, John
Marshall, David (Shettleston)


Hall, Mike (Weaver Vale)
Marshall-Andrews, Robert


Hancock, Mike
Martlew, Eric


Hanson, David
Michael, Alun


Harman, Rt Hon Ms Harriet
Michie, Bill (Shef'ld Heeley)


Harvey, Nick
Michie, Mrs Ray (Argyll & Bute)


Heal, Mrs Sylvia
Milburn, Alan


Heath, David (Somerton & Frome)
Moffatt, Laura


Henderson, Ivan (Harwich)
Moonie, Dr Lewis


Heppell, John
Moore, Michael


Hesford, Stephen
Morley, Elliot


Hewitt, Ms Patricia
Morris, Ms Estelle (B'ham Yardley)


Hill, Keith
Mudie, George


Hodge, Ms Margaret
Mullin, Chris


Home Robertson, John
Murphy, Denis (Wansbeck)


Hood, Jimmy
Murphy, Paul (Torfaen)





Naysmith, Dr Doug
Smith, Llew (Blaenau Gwent)


Oaten, Mark
Smith, Sir Robert (W Ab'd'ns)


O'Brien, Bill (Normanton)
Snape, Peter


O'Brien, Mike (N Warks)
Soley, Clive


O'Hara, Eddie
Spellar, John


Olner, Bill
Squire, Ms Rachel


O'Neill, Martin
Starkey, Dr Phyllis


Öpik, Lembit
Steinberg, Gerry


Organ, Mrs Diana
Stewart, David (Inverness E)


Osborne, Ms Sandra
Stewart, Ian (Eccles)


Pearson, Ian
Stinchcombe, Paul


Pendry, Tom
Stoate, Dr Howard


Pickthall, Colin
Stott, Roger


Pike, Peter L
Strang, Rt Hon Dr Gavin


Pollard, Kerry
Straw, Rt Hon Jack


Pope, Greg
Stringer, Graham


Pound, Stephen
Stunell, Andrew


Powell, Sir Raymond
Sutcliffe, Gerry


Prentice, Gordon (Pendle)
Taylor, Rt Hon Mrs Ann (Dewsbury)


Purchase, Ken



Quinn, Lawrie
Taylor, David (NW Leics)


Radice, Giles
Temple-Morris, Peter


Rammell, Bill
Tipping, Paddy


Rapson, Syd
Touhig, Don


Raynsford, Nick
Truswell, Paul


Reed, Andrew (Loughborough)
Turner, Dennis (Wolverh'ton SE)


Reid, Dr John (Hamilton N)
Turner, Dr Desmond (Kemptown)


Rendel, David
Twigg, Derek (Halton)


Robertson, Rt Hon George (Hamilton S)
Twigg, Stephen (Enfield)



Tyler, Paul


Robinson, Geoffrey (Cov'try NW)
Walley, Ms Joan


Roche, Mrs Barbara
Ward, Ms Claire


Rogers, Allan
Wareing, Robert N


Rooker, Jeff
Watts, David


Rooney, Terry
Webb, Steve


Ross, Ernie (Dundee W)
White, Brian


Ruddock, Ms Joan
Whitehead, Dr Alan


Russell, Bob (Colchester)
Wicks, Malcolm


Russell, Ms Christine (Chester)
Williams, Rt Hon Alan (Swansea W)


Salter, Martin



Sanders, Adrian
Williams, Alan W (E Carmarthen)


Sarwar, Mohammad
Wilson, Brian


Savidge, Malcolm
Winnick, David


Sawford, Phil
Wise, Audrey


Sedgemore, Brian
Worthington, Tony


Sheerman, Barry
Wray, James


Sheldon, Rt Hon Robert
Wright, Anthony D (Gt Yarmouth)


Skinner, Dennis
Wyatt, Derek


Smith, Rt Hon Andrew (Oxford E)



Smith, Angela (Basildon)
Tellers for the Noes:


Smith, Rt Hon Chris (Islington S)
Ms Bridget Prentice and


Smith, John (Glamorgan)
Mr. Jim Dowd.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments) and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House welcomes the measures the Government has taken to build an economy which is healthy and sustainable in the long term, including placing the control of interest rates with the independent Bank of England; notes that over the last 12 months investment has grown by 7 per cent., 14,000 manufacturing jobs have been created and the public finances have been put in order; welcomes the new culture of partnership in industrial relations which is developing within the framework of measures and proposals the Government is taking forward; urges the Government to continue its own productive partnership with both business and employees; and condemns the Opposition for its own record in government of allowing manufacturing to decline within a boom and bust economy of unprecedented proportions and actively and sustainedly destroying partnership and democracy in the workplace.

Department of Social Security

Mr. Deputy Speaker (Mr. Michael Lord): I have to tell the House that Madam Speaker has selected the amendment in the name of the Prime Minister.

Mr. Iain Duncan Smith: I beg to move,
That this House deeply regrets the Government's failure to meet their election pledges to reduce social security costs; believes that this is a direct result of incompetent leadership at the Department of Social Security which has created confusion, contradictory policies and delays and has wasted their first year in Government.
Fourteen months into this Parliament, I and all my colleagues believe that the time is ripe for a review of the progress made by the Government and their Ministers in the Department of Social Security. [Interruption.] I knew that the Secretary of State would agree with me; I always set out to be helpful.
Today, we shall simply judge the Government, and the Secretary of State and her Ministers, by their own rhetoric and targets; we shall not invent any for them, but simply go by the ones that they set themselves. I and my colleagues want to see what has become of the Prime Minister's promise that Labour would be
the party of welfare reform,
that it would
design a modern welfare state based on rights and duties going together",
and that, ultimately, it would reduce dependency and spending. Those were the promises. Have the Labour Government achieved them, or have they achieved instead incompetence and political inertia? Those are the two charges against them.
Perhaps first we may deal with the charge of incompetence. I shall list some examples of the escalating levels of incompetence at the DSS which have occurred during the past 14 months. Perhaps we could start with the winter fuel payment scheme, which sums up that charge almost as well as any other. The Government spent nearly £1.7 million on an advertising campaign—some £850,000 on the television advertisement alone.

Mr. Phil Hope: Will the hon. Gentleman give way?

Mr. Duncan Smith: In a minute.
Yet pensioners were to receive those payments automatically, so the campaign was unnecessary. With pictures of cheques dropping through letter-boxes, the advertising campaign only made it worse. Pensioners were encouraged to believe, and actually believed—when I went around talking to them, many that I met certainly did—that they would receive those payments without having to do anything about it.

Mr. Hope: rose—

Mr. Duncan Smith: I shall give way in a minute.
However, the majority of pensioners collected theirs through the post office, and the advertisement took no account of that reality. Of those lucky enough to receive the cheques, more than 40,000 were sent cheques that

bounced because they were out of date. Then, more than 9,000 of those cheques were sent to those who did not even qualify—more than 1,000 of whom were in local authority residential care.
The pressure that the Government put on officials to get things done in a hurry was largely responsible for that problem. Officials that I have met in many of the Benefits Agency offices that I have visited around the country have complained and commented adversely about that.
In May, it was revealed that as many as 100,000 cheques were still to be collected at post offices.

Mr. Kevin Hughes: How many pensioners?

Mr. Duncan Smith: I said 100,000; perhaps the hon. Gentleman's ears need clearing out.
Many pensioners had probably been misled by the advertisements and were still waiting for the cheques to drop through the letter-box. They continued to wait.

Mr. David Hanson: Will the hon. Gentleman give way?

Mr. Duncan Smith: In a moment.
There are also serious question marks over the selection of the advertising agency. Although the agency had been used by the DSS previously, when my colleagues were in government, the difference is that the present Government must have been aware at the time when they placed the campaign that the Labour party had an account with that agency. Why not, then, prevent speculation about why they placed that contract, by going out to competitive tender? They did no such thing. In fact, most interesting of all, they decided to place it without such a tendering process; I believe that it leaves them vulnerable to another charge of cronyism. It links very nicely with what has been going on over the weekend, and a certain amount of "cronygate".

Mr. Hanson: Instead of nit-picking and carping about some of the issues, will the hon. Gentleman tell the House straight: does he support the giving of that fuel grant in the first place? That is what pensioners in my constituency are interested in: the fuel grant received on their doorsteps, in their wage packets, in their bills, paying for those winter heating bills.

Mr. Duncan Smith: That is, of course, if they received them and were able to cash them. I must say to the hon. Gentleman—

Mr. Hanson: Does the hon. Gentleman support winter payments?

Mr. Duncan Smith: I am just about to answer that. In due course, I shall make some very serious charges about this wasted year, when policy has gone missing. In reply to the question of whether we support this, my simple answer is that I would support anything that improves and increases—[Interruption.] Wait a minute. I would support anything that improves and increases the income of pensioners, provided that the Government who do so can afford it. The question remains, can the Government now afford what they are promising


pensioners? I shall come to that in a second. I believe that the hon. Gentleman will have less to say on that in due course.
I have left the subject of cronyism and the poor way in which the Government have handled the process of paying pensioners winter fuel payments, but there are many other examples of incompetence. [Interruption.] If the Secretary of State would keep quiet for a second, she might learn some things about how matters have been mishandled throughout the past 14 months by her.
For example, in December 1997, the Secretary of State—the same one who seems intent on making comments from a sedentary position—was the first for more than 20 years not to make the uprating statement in the Chamber, or to speak in the uprating debate. That debate is possibly the single most important thing that happens to the Social Security Department in the year—and she did not come to the House. She sent someone else—two different people, in fact. They were the hon. Member for Manchester, Withington (Mr. Bradley), a junior Minister; and the Minister of State.
In September, the DSS head of information, Steve Reardon, was axed by the same Secretary of State. Apparently, the Secretary of State removed him because he could not read her mind. At first, she seemed to be for a Cabinet pay rise. Then, when the Chancellor expressed the opinion that he was not for a Cabinet pay rise, it appears that the Secretary of State was not for a Cabinet pay rise. Mr. Reardon, a long-standing civil servant held in high regard, apparently could not cope with the pace of Government U-turns. He could check what they were doing, he could follow the turn, but not that quickly, when it happened almost the same day.
However, firing the messenger is not the answer, and spin is not the solution. In November and December, a number of leaks revealed that the Government intended to cut disability benefit and introduce a tax on child benefit. Those leaks continued, with plenty of opportunity for the Secretary of State or her Ministers to say that they were rubbish.
In the new year, the Secretary of State caused unnecessary concern by again floating the idea of an affluence test—I believe that that was when the Prime Minister was in Japan—including the proposal to means-test the basic state pension. Originally the Government were quite keen on the idea of an affluence test but, suddenly, they thought that it would be unpopular, so the Secretary of State was instructed by Downing street to issue a denial. That served to highlight yet again the confusion at the heart of Government.

Mr. Hope: There is nothing to do with social security contributions in that speech. Does the hon. Gentleman's party support the winter fuel payments that this Government introduced? Can he confirm that he would support the increase in child benefit? Those are two substantial welfare reform measures that this Government have introduced in this Parliament.

Mr. Duncan Smith: I see that the Whips' messengers are out in force. I have already answered that question. If the hon. Gentleman was not listening, that is his problem. He should try to pay attention.
I shall press on. In February and March, the Government were forced into a series of face-saving concessions to try to salvage the benefit integrity project.

The handling of that project provoked yet another rebuke from Downing street and also from Lord Ashley, the chairman of the all-party disablement group.
Then, the Secretary of State claimed with authority that there were women earning £1 million a year who claimed as much as £18,000 a week in maternity benefits. When journalists challenged that, the DSS had to explain the use of that figure. The Department replied:
it's a spurious figure, but it's one she uses to make her point. Like a lot of figures we give, it doesn't reflect real life.
The Secretary of State might like to carve that on her Dispatch Box. Perhaps it is a motto that she will take away with her. That is an absurd counter-statement from her own Department, when the Secretary of State uses figures that do not add up.
Of course, there was the Secretary of State's mishandling of the reform of lone parent benefits. Few of us will ever forget the Secretary of State cutting a lonely figure on the Front Bench in December, with no Cabinet colleague to give her support and her own Back Benchers angry about her change of heart on a policy that she had condemned before, and adopted after, the election.
The reason was simply costs. The Chancellor refused to budge. Not once in the run-up to that debate did the Secretary of State or the Prime Minister speak about the principle of the change. They talked about the cost and the need to stay within the budgets that they had inherited—never the principle.
In January, the Government started their road shows. The public were vetted, and only those who were members of the Labour party were allowed to attend. When Labour party members became too troublesome, only those who were good members of the Labour party could come to the road shows. Eventually, even the Secretary of State was not allowed to attend. It was only at the road shows that the Government started to talk tentatively about the principle. Perhaps the Secretary of State would like to give her opinion and tell us whether she supports principle or cost-saving.
So beleaguered had the Secretary of State become that, in March, she broke off an interview with the BBC's "Women's Hour", leaving the studio when an interviewer apparently asked an unfriendly question.
Those examples of incompetence bring us to the serious charge of failure of policy. If the Under-Secretary, the hon. Member for Withington, will listen carefully, he will understand how that leads directly to the failure of his Department.
When the Government were elected, the Prime Minister appointed the Minister of State to his new job, with the all-embracing title of Minister for Welfare Reform. His task was to think the unthinkable. Clearly, the Prime Minister wanted to make people believe that he was serious about a radical reform of social security. We all thought, when he appointed the Minister of State, the man with such a track record, that that might have been his intent. I expect the Minister thought so too.
By late September, the Prime Minister had in his possession the Minister of State's considered views on reform—a Green Paper. It was just such a Green Paper that had been promised as a matter of urgency back in May, yet, far from seeing the light of day, that document was kicked around between the Chancellor and the Prime Minister and later even the Secretary of State.


The Government had expressed the intention that it would be published before Christmas. Nick Timmins wrote in the Financial Times:
Frank Field, the Minister for Welfare Reform had a publication date of December 7th pencilled in for his green paper.
He had clearly been carefully briefed.
However, the Chancellor ensured that the Green Paper did not come out until after he had delivered the Budget, where he signalled a very different set of changes from those outlined by the Minister of State in past publications. The result was an emasculated Green Paper in March, which a number of influential commentators dismissed.
In the Financial Times of 27 March, Nick Timmins, whom most hon. Members respect as a commentator, stated:
Almost four months on, the green paper actually manages to tell the public less about what is going on in welfare reform than it has already learnt from the leaking, spinning, and announcements that have taken place.
The Sunday Times of 29 March described that as "a missed opportunity" and Melanie Phillips, one of the people whom the Government like to brief, wrote in The Observer:
Presenting Frank Field's Green Paper on welfare reform after the budget is back to front politics.…the reason for the disorder is the lack of a coherent approach in Government.
That is the real issue—the lack of a serious and coherent approach, with everyone taking a chunk of welfare reform.
A classic example of lack of coherence in the reform process is reflected in the working families tax credit package. People will be paid benefits—credits—even if they are earning more than £30,000 a year. However, the Secretary of State seems to be obsessed by the idea of middle-class dependency, and she will affluence-test the same people to whom she plans to pay that credit—a case of absurdity and confusion.
The saddest part of the saga is the way in which the Prime Minister has walked away from his Minister of State and let the Chancellor continue to concentrate power in the Treasury.

Mr. Malcolm Wicks: The Government whose social security policy is under scrutiny have published a strategy paper on welfare reform. Today, they published a paper on benefit fraud. Last week, they published a major document on child support. Will the shadow Secretary of State at some stage in his speech treat us to his views on substance, and will he get out of the gutter?

Mr. Duncan Smith: I have just dealt with substance. Labour Members do not like the fact that there is very little of substance in anything that the Government have yet produced. On the second point, they should not leave so much of what they think in the gutter.

Mr. Wicks: Let us deal with two matters of substance. We all agree, I hope, on the reform of child support. The Government propose a simpler formula and a maintenance

disregard to give mothers some of the child maintenance. Does the shadow Secretary of State support those two major measures for reform?

Mr. Duncan Smith: The hon. Gentleman knows very well that, when the Secretary of State came to the House with her proposals for Child Support Agency reforms, I said that, as far as we could make them work, we would support any constructive reforms. I shall deal with that later, if the hon. Gentleman will wait. It is no good his talking about the gutter. Are The Observer, The Sunday Times and the Financial Times all in the gutter? Are all those commentators, who spend their lives considering social security matters, suddenly in the gutter because they disagree with the Government? That does the hon. Gentleman no credit.

Mr. Hope: rose—

Mr. Duncan Smith: No, I have given way to the hon. Gentleman already. I shall make progress.
Beyond the Green Paper, perhaps the single most important issue facing the Government is the reform of pensions. What Melanie Phillips described as incoherence is well illustrated by the pensions policy review process. The Government are boxed in by their pre-election attacks on the basic pension plus proposals, which were described by The Times as the
most dishonest act of the campaign"—
that is, the 1997 general election campaign. The Government's commitment to the state earnings-related pension scheme conflicts with the Minister of State's views, and has added to the confusion over pension reform.
The Chancellor contributed to the confusion by taxing pension funds early on and devaluing the SERPS rebate by getting rid of advance corporation tax dividend tax credit, raiding £5 billion a year from those funds. That complicated a review of pensions that was already likely to be complicated, and that is, after three consultations and endless leaks, finally to be kicked into the long grass by the Chancellor, perhaps some time in the autumn, even though the Minister, as he knows full well, said that it would be published in the first half of this year.
What is absolutely clear is that this area has been taken over by the Treasury; we know that from the leaks at the weekend about top-up payments. Such announcements always beg more questions than they answer, and it seems ironic that the pensions review is delayed and delayed while the Chancellor leaks his proposals without regard to the process of pension reform. Yet again, the Chancellor is pre-empting another Department of Social Security Green Paper. The two Departments should work together, not against each other.

Mr. Hope: Does the hon. Gentleman realise that there have been more than 2,000 submissions to the pension review from a substantial range of private sector organisations, voluntary organisations and many others? Will he confirm that the number of submissions from Conservative Members is nil?

Mr. Duncan Smith: What is most interesting about the hon. Gentleman's comment is that he has obviously not studied how many submissions came in. There were


2,000 to the first consultation but, by the time of the third, the number had dropped as low as about 10—people were sick and tired of constantly being asked to make policy for the Government. The Government were supposed to make proposals, but they have come forward with none. The hon. Gentleman should read those submissions, because they make fascinating reading—although his intervention was obviously quite facile.
No policy had been more hyped than the Secretary of State's pet project, the new deal for lone parents.

The Secretary of State for Social Security and Minister for Women (Ms Harriet Harman): Hear, hear.

Mr. Duncan Smith: From the start, the figures showed that the vast majority of lone parents did not want to take part, with 75 per cent. not answering the first letter of invitation to interview and a return to work figure that oscillates, at best, between 5 and 7 per cent.
The right hon. Lady said, "Hear, hear," when I mentioned her pet project, but if she had spent a tenth of the time considering pensions and supporting the Minister for Welfare Reform, we might not have this problem. She has avoided the most serious area altogether, because she feels uncomfortable with it. If she had not been a single-issue merchant, and had got on with running the Department, we would not have the problem on pensions and we may not have had the problem on lone parents.

Mr. John Heppell: Will the hon. Gentleman give way?

Mr. Duncan Smith: No, I want to make progress.
Before any understanding of the figures could be gained, the Secretary of State leaped up and claimed success in September last year, a full two and a half months after the project got under way-wow! She claimed a figure of 20 per cent.; 5 per cent., the media said. The media were right. Furthermore, a large number of the 5 per cent. who returned to work would have done so any way, and the Secretary of State never gave us a breakdown for that figure.
That did not stop the Secretary of State continuing to issue press release after press release claiming success and credit when none was apparent. She has told us how much she is spending on the lone parent initiative, but, remember, she said, "Spend to save." She said that the initiative would save money by getting people into work. I have two questions for her, and perhaps she will answer right now: how much, exactly, will it save, and how many jobs will it create? I shall give way if she wants to give me the answers. No, she does not.

Mr. Steve Webb: The hon. Gentleman has criticised the poor response rate to the new deal for lone parents. Is he aware that, when the Conservatives set up their parent plus pilot—of which, I believe, he was a supporter—they budgeted for a lower response rate than has been achieved on the new deal?

Mr. Duncan Smith: The hon. Gentleman raises an interesting point, because, as he will recall, that programme had one simple difference: the Secretary of State adopted the pilot areas, but she failed to take on the qualification programme involved with it. In every area,

groups were divided into two and would have been checked from start to finish. Instead of having to rely on general figures from the Secretary of State, the hon. Gentleman would have known by now exactly what created the environment for people to go to work, which policy was the most successful and which were not working.
The Secretary of State has none of that in place, because, from the start, this was a political initiative aimed at saying, "Look, we did something." The Government, however, junked the most important part of the programme, which we had already set up. The hon. Gentleman, if he had checked, would have realised that we included the qualification programmes to check how the programme would work.
Let us deal with the cost, which is perhaps the most important issue. The most damning charge against the Government is the rising cost, given that Labour said that it would
increase the share of national income spent on education as we decrease it on the bills of economic and social failure.
The record is quite different. The working families tax credit will cost £420 million in 1999–2000, and £1.35 billion in 2000–01. Now we discover that the Chancellor is busy trying to hide £5 billion a year from the welfare bill by changing the way in which he accounts for the annual cost of the WFTC. By a process of smoke and mirrors, he intends to try to slide that money under the heading of accounting adjustments.
Everyone knows that that is an outrageous attempt to pretend that he has reduced the cost of welfare by £5 billion a year. The Office for National Statistics dismisses his claim that WFTC is part of the income tax system, and the Institute for Fiscal Studies said that it was "massively unhelpful" of the Chancellor to try to do that. He stands exposed not only of increasing the cost, but of trying to hide the core cost of £5 billion a year and pretending that he has saved money. That is a classic example of the Government saying and doing anything to pretend to the public that they are achieving their results.
The cost of the lone parent benefit, disability living allowance linking rule is an extra £10 million a year; changes to national insurance will cost £1.2 billion in 1999–2000 and £1.35 billion in 2000–01; the new child support package will cost £170 million in 1998–99, which will rise to £1.1 billion in 1999–2000 and more than that for 2000–01; and winter fuel payments cost £200 million in 1997–98, and will cost £200 million in 1998–99. The Government have never explained where they are getting the money for all that.

Mr. Heppell: Will the hon. Gentleman give way?

Mr. Duncan Smith: No, I am not giving way.
Rather like the Chancellor's 2.25 per cent. projected increase in public spending, the new spending commitment to more than £7 billion appears to be an underestimate, as ever. This is only the beginning of the Government pumping up the whole of the social security budget.

Mr. Hanson: rose—

Mr. Heppell: rose—

Mr. Duncan Smith: I am not giving way; I intend to conclude shortly.
Equally serious is that, in spite of the talk about hand up and not hand-out, and getting people off welfare and into work, more people have been brought into the dependency net by extending the tapers and the raising of disregards in the new working families tax credit. Figures show that as many as 400,000 new families will be brought into dependency as a result of the measures announced in the previous Budget. That is an increase in dependency from the party that said that it would not increase dependency, but would cut it. That serious charge is levelled at the Government, and Ministers do not like it, because every single initiative has been a failure.

The Parliamentary Under-Secretary of State for Social Security (Mr. Keith Bradley): The hon. Gentleman has been given a note—he has been going on for too long.

Mr. Duncan Smith: I asked my hon. Friend the Member for Grantham and Stamford (Mr. Davies) about the time, so the Minister should sit back on his Bench.
Add to all that the fact that a number of reviews are still to report, and the process of reform almost becomes biblical. Today was another example: Green Paper begets Green Paper begets Green Paper. There is not a policy in sight, with endless review after endless review.

Mr. Heppell: Will the hon. Gentleman give way?

Mr. Duncan Smith: No. The hon. Gentleman has nothing else to add.
The real problem that lies behind all that incompetence and policy failure is that, when the Government look back on their first year in office, they will realise that there has been a tragic waste of the best year that any Government since the war have had to reform welfare. On 28 March, The Economist said:
The danger is that the story they record this year is the birth not of a better welfare system but just of a more expensive one.
That indictment of the very party that said that it would cut the bills hangs around the Secretary of State's neck.

Mr. Heppell: Will the hon. Gentleman give way?

Mr. Deputy Speaker: Order. The hon. Gentleman has said quite clearly that he is not giving way. Hon. Members must remain seated.

Mr. Duncan Smith: That indictment is becoming clearer as we head towards a public expenditure statement which has already loosened constraints on public spending without there being any constructive reform policies that might, in the long run, lead to better focus and the reduction of the burden of dependency and, with it, the unnecessary cost to the taxpayer. The Minister for Welfare Reform knows that, because that is why he was brought into the Government. It would have been better if he had been given his head properly to propose measures that could have been implemented.
On 1 January, the Opposition rightly offered the Government the chance of a serious debate on welfare reform. None has been forthcoming. Since then, we have

been through a series of disappointments, delayed reviews and reviews that seem to point nowhere in particular, with long timetables running out to 2020, as if the next election will not matter. I supported the statement on the Child Support Agency, because it was their only constructive proposal. We have shown that we are prepared to have a serious debate, but the Government are running scared and have not taken up our offer.
During the past year, the Government have had a golden opportunity, but they have wasted it, because they have failed to deal with welfare reform constructively and positively. We charge them with total failure and incompetence, and I am afraid that that charge sticks.

The Secretary of State for Social Security and Minister for Women (Ms Harriet Harman): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
congratulates the Government for their outstanding record in pursuing their efforts to provide opportunities for those who can work and security for those who cannot, to cut expenditure on economic and social failure and to modernise the welfare system.
One would not think from listening to the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) that tonight provides an opportunity to debate one of the crucial issues facing the House and the country: welfare reform. The hon. Gentleman failed to address any of the really important questions.
Despite the fact that, according to my hon. Friends, the hon. Gentleman spoke for 26 minutes—it seemed longer—he failed to set out his approach to tackling poverty, worklessness and social exclusion. We heard nothing about his proposals to support children and families. He had nothing to say about proposals to ensure security in retirement for pensioners. He made no suggestions about rooting fraud out of the system or how to tackle the spiralling costs of social and economic failure. He cannot decide whether he thinks that our policies do not work or that we do not have any—he changes from one view to the other.
The hon. Gentleman's so-called allegations—such as the allegation of cronyism—are either untrue or irrelevant. For the record, the company that had the advertising contract to make pensioners aware of the winter fuel payments was on a standing contract initiated by the Conservative Government, so if they are anyone's cronies, they are his. When I took up office as Secretary of State for Social Security, I and my team of Ministers took over a system that was in crying need of reform. Poverty and social exclusion were growing, and yet the costs of social security were rising.

Mr. Duncan Smith: They still are.

Ms Harman: They are not.
The system that we inherited from the Tories left one in five households of working age with no one in work. It left one in four children being brought up on benefits, never seeing the world of work. It left one in four pensioners existing on income support, or, worse, living below the income support level. The Tories wrote off millions of people who wanted to work—wrote them off to a life of dependence on benefits.
Despite profound social and economic change, the social security system still reflected the assumptions of Beveridge's day rather than the patterns of life today and of the next century. The social security system that we inherited was based on the assumption that men were the breadwinners and were in permanent full-time employment—interrupted only by temporary periods of unemployment—and that disabled people would be supported on benefits.
The Tories had not changed the system from Beveridge's assumption that women would be married and would stay married, that the woman's husband would support her while he was working, that his national insurance contributions would provide for her as well as for him if he was temporarily out of work, that she would depend on his income in retirement, and that his insurance would provide for her after his death. The social security system provided security for the man, and the man provided security for the woman.
Beveridge said that when women get married women, they
give up gainful occupation. Housewives and mothers have vital work to do in ensuring the continuance of the British race.
Even though half those in employment are women, the system that I and my team of Ministers inherited did not expect women to work. Even if the man was unemployed and the woman had no children, she was classed as dependent on him rather than being available for work.
The Tories did not reform the system from Beveridge's expectation that women would be housewives and mothers, and would not bring up children on their own. Even though one in three marriages now break down and every year 100,000 children are born to couples who do not live together, the system that I and my team of Ministers inherited had not woken up to that, and had simply allowed more than a million lone mothers and their children to drift on to income support. Lone mothers have to bring up their children the hard way—on their own, on income support and with no money coming in from the father. That has resulted in mounting costs to the public purse and spiralling costs of social exclusion.
The Tories did not reform the system from Beveridge's expectation that people with long-term health problems or disabilities would depend on benefits but would not work. In Beveridge's day, most jobs involved heavy manual work. People with physical and mental disability or learning disabilities were beset by prejudice, so disability was synonymous with benefit dependence. Now there are 2 million long-term sick or disabled people who work, and 1 million more people who could work and who want to work. The system that we inherited was simply about classifying them and paying them benefit. It gave them no concerted help to get into work.
Beveridge assumed that people's work would provide the foundation of their income in retirement, and that it would only be a short retirement. Yet the system that we inherited left 1.5 million pensioners claiming income support and a further 1 million living below the breadline—not even getting the income support to which they are entitled.
Despite a revolution in the delivery of services—one can arrange most of one's life over the phone, from shopping to mortgages, 24 hours a day—the social security system that we inherited expected people to turn up at the office, queue, fill in pages and pages of forms

and ask for the same information three times. No one ever explained or apologised. Few would say that claiming from the social security system was a pleasant experience, and few working in social security would disagree.
After 18 years in government, surely the Tories should have been aware of the profound social and economic changes, and should have understood and acted on them. Instead, the social security system was stuck in the past. The Tories failed to modernise it, and everyone was losing: the people who were written off to benefit dependence and the taxpayer who had to foot the bill.
We promised to modernise the social security system and to make it fair. We set out in our Green Paper the principles underpinning our welfare reform: work for those who can and security for those who cannot. We promised to tackle poverty and inequality, to cut the cost of social and economic failure and to tackle the scourge of fraud. That is what we promised, and that is exactly what we are doing. On the principle of work for those who can, our programme to help the young unemployed into work or training is well under way. Our programme for the long-term unemployed has begun.
But we have done more. The previous Government assumed that there were two groups of people, so only two Government policies were needed. The two groups were, first, people who were required to work and who would be helped to do so—which was considered to be Department of Education and Employment business—and, secondly, people who were not required to work and who were to be paid benefits—which was considered to be Department of Social Security business. They had no programmes for those who were not required to work, but who wanted to work and get off benefits and who could work.
To tackle the problem of workless households, I have looked beyond the employment register and asked who wants to work even though they are not compelled to work, and how we can help them to be better off and lessen their benefit dependence. I have established two completely new programmes, financed by the Chancellor out of the windfall levy: the new deal for lone parents and the new deal for the disabled.
The new deal for lone parents offers lone parents whose children are of school age help and advice into work. The step from the security of income support into work is difficult if they have to do it on their own, even with benefits to back them up in work. They cannot take risks if their children are depending on them. The new deal for lone parents gives them a personal adviser: a friend on the inside track who can advise them about jobs, training, interviews, benefits and child care—all the things a lone parent has to consider when she moves into work. The new deal is making a real difference.

Mr. Quentin Davies: I thank the right hon. Lady for giving way, but she knows perfectly well that her "new deal" for lone parents has been a complete shambles. She knows that 75 per cent. of lone parents contacted by the Benefits Agency did not even bother to respond, and that, on all the estimates, much fewer than 5 per cent. of lone parents who are currently on benefit have returned to work. Indeed, some estimates put the figure as low as 1 per cent. Will the


right hon. Lady give the House her own estimate of the number of lone parents who will find jobs as a result of the programme? What is her target?

Ms Harman: I do not need to give the House my estimate of the number of lone parents who will find jobs as a result of the new deal for lone parents. We have spent up to £1 million on an independent evaluation—by Social and Community Planning Research—of the additional number of lone parents who are in work and off benefit as a result of the new deal. The interim findings show that there are more lone parents in work than there would have been without the new deal, and that, if the new deal had been operating across the country— beyond the eight pilot areas—a further 10,000 lone parents would have been in work, and not on income support, as a direct result of it.
The hon. Member for Grantham and Stamford (Mr. Davies) presented me with a number of figures, which were mentioned on the radio by his hon. Friend the Member for Chingford and Woodford Green. Let me tell the House what Social and Community Planning Research said about those figures. It said that the hon. Gentleman's figures were
meaningless…leading to an incorrect conclusion".

Mr. Quentin Davies: rose—

Ms Harman: If the hon. Gentleman wishes to intervene again, I will give way to him.

Mr. Davies: At least the figures given by my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) were figures. The right hon. Lady seems to be incapable of setting any targets, or coming up with any figures. Her response to me just now involved a double evasion. First, she shuffled off responsibility for evaluating the worthwhileness of her programme on to some so-called independent agency; secondly, she—who is responsible for the expenditure of public money in this regard, clearly has no business plan, and clearly has not worked out in her own mind what kind of public expenditure—

Mr. Deputy Speaker: Order.

Mr. Davies: She has not worked out what kind of public expenditure is worth budgeting—

Mr. Deputy Speaker: Order. The hon. Gentleman must take his seat when I am on my feet. His intervention has been too long.

Ms Harman: The hon. Member for Grantham and Stamford (Mr. Davies) has just astonished the House with his commitment to lone parents—a commitment that he did not find it possible to voice during all the years when his party was in government, and which he has mentioned for the first time during its time in opposition.
In fact, I did give a figure. If the new deal for lone parents had been working nationally beyond the eight pilot areas, an additional 10,000 lone parents would have been in work and not on income support. The new deal is making a real difference.
I am immensely proud of the work of our personal advisers. Although not highly paid, the staff are highly motivated, and have worked with determination, sensitivity and initiative. I am grateful to the Opposition for giving me an opportunity to place on record the great debt that we owe to the pioneer personal advisers. Most are women, many are mothers and some are lone mothers themselves. They have changed the face of social security, and their work means that today more lone parents are now in work and off benefit than would be the case otherwise.
Let me also place on record our thanks to lone parents organisations such as Gingerbread and the National Council for One Parent Families. Unlike the Opposition spokesman, those organisations care about lone parents; unlike him, they know what they are talking about. They helped to design our new deal for lone parents, and to design the training for our personal advisers. Above all, however, we need to recognise the lone parents to whom being a good mother means providing for children as well as caring for them. Such parents want to work not only to give their children a better standard of living than they could provide on benefits, but to show them that life is about work, not just about dependence on benefits. They want to work because—like other mothers—they know that they can contribute to society by working, as well as by rearing children.
Lone mothers who have found work through the new deal are, on average, £39 a week better off than they were on benefits, and their benefit dependence is reduced by £42 a week. They are better off, and the taxpayer is better off. That is the approach of welfare to work: a hand up, not just a handout. The new deal for lone parents will become national in October.

Mr. Oliver Letwin: Laying aside all party-political broadcasts for a second, will the right hon. Lady tell us whether she would genuinely regard it as a success if her programme led to 1 per cent. of lone parents returning to work?

Ms Harman: I will not set targets. I have said that we will set targets once we have received the final result of the evaluation. No Government acting sensibly set targets before they have completed the pilots and the evaluation.

Mr. Duncan Smith: With respect, the right hon. Lady just said that she would not set targets, but she has given a figure of 10,000, and she is talking about a 1 per cent. figure. She is going national, without any idea of where the success lies. If she is going national—if the process is no longer experimental—she must surely tell us what the target is. Is it 1 per cent.?

Ms Harman: The 10,000 figure was not a target; it was what Social and Community Planning Research findings showed would be the number of additional lone parents in work had the new deal been extended nationally. The body also says that the size of the difference has increased gradually over time, and can be expected to continue to increase. I have said that we will set our target when we have the full results of the evaluation.
This is welfare reform in action. The working families tax credit will help to make work pay even more for lone mothers; the national child-care strategy and the


child-care tax credit will make it even easier for lone mothers to work by ensuring high-quality, affordable, accessible child care for all; and family-friendly employment policies, including extended maternity leave and reformed maternity pay, will help women and men to combine their work and family responsibilities. The hon. Member for Chingford and Woodford Green made a good deal of my comments about statutory maternity pay, but his Government never reformed the statutory maternity pay system—a system that leaves the lowest-earning one fifth of women without the cover provided by statutory maternity pay.
I have made it clear that fathers, as well as lone mothers, have a responsibility to their children. The reform of the Child Support Agency—a policy ably developed by my noble Friend Lady Hollis, which I announced to the House last week—aims to ensure that fathers pay for their children. Our child maintenance premium will ensure that, for the first time, 700,000 children will be £10 a week better off through their fathers' maintenance. That, together with our unprecedented increase in child benefit, will make children better off, and will strengthen fathers' parental responsibility.
Let me say to the hon. Gentleman and his hon. Friends that, whatever the hon. Gentleman says—for all his puff and bluster, and his jousting with figures—he knows that this is modernisation for good, and that no Government will ever go back on the system that I have created.
We are also modernising the welfare system for people with disabilities. Most disabled young people in my constituency, and their mothers, tell me that they want the same as everyone else. They want to work like everyone else, to take pride in their work, to make friends at work and to earn their living at work. They want to contribute to society, not just to take. That is why my right hon. Friend the Secretary of State for Education and Employment and I, with finance from the windfall levy, have extended the new deal to the long-term sick and disabled. That is welfare reform in action.
That has four strands: active advice and support for those seeking work; taking the disincentives to work out of the benefit system and extending to the disabled the incentives formerly available only to the registered unemployed; making work pay for those whose earnings are depressed by disability; tackling discrimination with tough new standards for employers, and giving employers incentives to extend opportunities to people with health problems or a disability.
In October, we begin the first of 12 pilot projects to offer, through jobcentres, personal advisers along the same lines as the new deal for lone parents. Those pilots will cover 250,000 people on incapacity benefit, who are among the many hundreds of thousands of people who were written off by the previous Government to a life of dependence on benefit. However, we know that it is in the voluntary sector that there is great expertise in helping people with disabilities and health problems, so we are awarding grants to partnerships of voluntary organisations and employers to pilot ways in which to help disabled people to get and stay in work.
This Thursday, the Secretary of State for Education and Employment and I will announce the 10 successful bids for the first tranche of partnerships. Our approach is to provide the opportunities and support for people who want to work to do so; the social security system that

I inherited denied sick and disabled people those opportunities. Worse, to get the unemployment figures down, the Tories encouraged people off unemployment benefit and on to incapacity benefit. Classifying them as incapable of work solved the problem of the Tories' rising unemployment figures, but it increased the number of workless households, and wrote them off to a marginalised life on benefit.
About 1 million people on incapacity benefit are capable of at least some work. Under the Tories, if they took a risk and got a job, they were punished if it did not work out: they could go back on benefit, but be up to £40 a week worse off than when they were previously on benefit. Therefore, I have changed that, so that, if their job does not work out within the first 12 months, people can go back to the same rate of IB that they left. That encourages people to move off benefit into work, rather than penalising them.
We are piloting the extension to those on incapacity benefit of the jobmatch payment and the jobfinders grant, which are currently available only to those on jobseeker's allowance. Those on incapacity benefit face the same expenses as those on JSA in moving into work after a long time on benefit, so they should get the same help—the hon. Member for Chingford and Woodford Green and his hon. Friends never supported that. We are also helping people with health problems or disabilities to be much better off in work than on benefit, with our new disabled persons tax credit.
For a disabled person with a child under 11, moving from incapacity benefit to the disabled persons tax credit in work could mean that they are better off by £36 a week, and that their benefit dependence will be reduced by £71 a week. It is a hand-up, not just a handout. They are better off, and the taxpayer is better off. We are tackling social exclusion and investing in opportunity. That is our welfare reform in action.
All that, and the tough stance against discrimination that has been taken by the Secretary of State for Education and Employment, amount to a radical programme of welfare reform that recognises for the first time the aspirations of people with disabilities, and acknowledges for the first time that their rights include the right to work.

Mr. Malcolm Wicks: With my right hon. Friend the Minister for Welfare Reform, I have met young adults in Croydon with very serious learning difficulties—some have Down's syndrome—who are now in work, but some of those in residential care seem to suffer from a particular poverty trap, because, to get their residential care cost, they have to stay on income support. It is a technical matter. I am not expecting an answer now, but will the Department of Social Security look closely at that matter, so that those young adults with serious learning difficulties can work full-time, not just part-time?

Ms Harman: My hon. Friend has raised an important point, and we will certainly look into it. The system is full of disincentives to work for people who are on incapacity benefit, or are disabled because there was never an expectation that they would want to work or could work. I thank him for raising the matter.
I have talked about welfare reform being about work for those who can, and I turn to security for those who cannot. That brings me to pensions. It is a great concern


that many of those heading to retirement face a drop in income that is far greater than it need be. It is a great scandal that many of the poorest people in Britain are pensioners—people who have worked hard all their lives, and now struggle to make ends meet.
For tomorrow's pensioners, we will reform the pension system, so that it tackles the growing inequality of income in retirement; extends occupational pensions to the many—up to 1 million—who currently do not join them; provides access to second pensions through our new stakeholder pensions for those who have no access to an occupational pension and for whom private pensions can be very poor value for money; provides second pension entitlements for those who care for an elderly or disabled relative or for children while they are young; and ensures that the growing number of the self-employed are properly provided for.
We will set out our pensions reform in a Green Paper, arising out of the work of the Under-Secretary of State for Social Security, my hon. Friend the Member for Southampton, Itchen (Mr. Denham), by the end of the year, but today's pensioners, particularly the poorest, cannot wait.
Hon. Members will remember that, while we were in opposition, pensions was an issue of some controversy within the Labour party. I was clear then, and I remain so, that we must recognise and take action to help all pensioners. We have done so with the cut in VAT and the winter fuel payment of £20 for every pensioner household, but I was also clear, and I remain so, that our priority must be to get help to the poorest pensioners—those on income support and those who are entitled to income support but not receiving it.
For pensioners on income support, we gave a winter fuel payment of £50.

Mr. Webb: The right hon. Lady rightly stresses the urgency of helping the poorest pensioners who are not claiming their income support. Does she accept that, on 1 May, when the Government came to power, half those 1 million pensioners were already claiming a means-tested benefit—housing benefit—and that local authorities throughout the land have lists of those 500,000 people, ready to hand over to central Government? Why is it going to take until the end of this year to get a Green Paper on something that could have been done 18 months ago?

Ms Harman: The hon. Gentleman raises an important point: it is possible to find out who is not claiming and get help to them. If I may, I will tell him how we are progressing on that element of the pension review in due course.

Mr. Tim Loughton: Will the right hon. Lady give way?

Ms Harman: I am not going to give way.
We estimate that about 1 million pensioners are entitled to income support, but do not receive it. The previous Government were never interested in that. They did not even know the figures until I asked a parliamentary question. At first, the figure was that 800,000 pensioners

were not receiving the income support to which they were entitled, and that rose to 1 million. That was a major failing of the previous Government—to leave 1 million pensioners not on the breadline, but below it. Again, I have taken action.
In April this year, I established, in nine areas, pilot projects to find ways in which to identify the poorest pensioners who are losing on their income support. In those pilot areas, we are searching our computer data and that of local authorities to identify those over pension age who look as if they might be eligible for income support but who are not registered as claiming it.
A personal adviser will then contact those pensioners, visit them and sort out their income support. The interim results of the research on those pilots shows that pensioners want help to find their way through the system—they cannot do it on their own, they do not want to wait in social security offices to get help, and they have simply no idea where to start. Our interim evaluation shows that some pensioners are losing 24p a week on unclaimed income support, and that others are losing up to £51 a week.
That is an indictment of the system that I inherited, and we are changing it. I visited one of the projects, in Paisley, Scotland, and met some of the pensioners and their personal advisers. The pensioners were delighted and relieved to be getting the extra help they need. The personal advisers were doing an excellent job—they, too, are changing the face of social security.
Our action is about ensuring that there is work for those who can and security for those who cannot, and getting benefits to those who are entitled to them. We are also stopping benefits going to those who are not entitled to them. I shall conclude by telling the House how we are transforming delivery of service and tackling fraud.
Social security reform has to deal not only with who gets money and how much they get, but with how the service is provided. That work is being ably led by the Under-Secretary of State for Social Security, my hon. Friend the Member for Manchester, Withington (Mr. Bradley). We are pioneering one-stop shops, so that those who are claiming do not have to go from the jobcentre, to the social security office and then to the council.
We are sorting out the forms, so that we do not ask those who are claiming three times for the same information, most of which we already have. We are also piloting telephone claims services for pensioners, introducing a new complaints system, and tackling fraud—work which was being ably developed by the Under-Secretary of State for Social Security, my hon. Friend the Member for lichen but is now being carried forward by my right hon. Friend the Minister for Welfare Reform.
In November 1997, I launched the benefit fraud inspectorate—which has already published its first report, on housing benefit fraud in Blackpool. Today, my right hon. Friend the Minister for Welfare Reform published a Green Paper on fraud, which he is working on tackling.
In this debate, I have explained to the House—at some length, for which I apologise—actions that amount to a major programme of welfare reform that is already up and running. After 18 years of the system going in the wrong direction, we never expected to turn it round overnight. However, substantial welfare reform is under way in


every part of the social security system. It is practical action—making a real difference to people's life—which is what matters to my constituents, and to those of other hon. Members on both sides of the House. That is a record on which I and my ministerial team are proud to be judged.

Mr. David Rendel: I do not think that any hon. Member would dispute the fact that, since the general election last May, there has been a great deal of confusion and even dissent at the Department of Social Security. We have seen open rebellion by Labour Members on the issue of lone parent benefit cuts, and a complete lack of long-promised policies to tackle the causes—as opposed to merely the symptoms—of pensioner poverty. We have seen, as recently as last week, the failure to produce a fair and workable solution to the problems of child support caused by the complex nature of human relationships. We have seen also what should have been key projects implemented in a disastrous manner.
It was therefore interesting to hear the Secretary of State concentrate in her speech almost entirely on the policies that she still intends to introduce in the future, rather than on the level of incompetence with which she and her colleagues have handled their portfolio in the past year. That latter point is the main subject of today's motion by the Conservatives.
Let us take, for example, the benefits integrity project. What a misnomer that was. The project's main outcome seems to have been to accuse unfairly many who have acted with complete integrity, only for those accusations to prove to be completely unfounded. The project that was supposed to evaluate entitlement to disability living allowance, and thereby to restore integrity, has managed simply to strip away the dignity of many of those who were investigated.
The Social Security Committee's report was uncompromisingly damning in its assessment of the project, and the project's outcome is now widely acknowledged as a failure. The Department of Social Security failed to uncover almost any fraudulent claims. Meanwhile, many of the most severely disabled people had their benefits reduced or even stopped. Some people—perhaps primarily Labour Members—seem to think that the Prime Minister is capable of walking on water. However, even he hit problems when the Government's solution to patients who are quadriplegics was to tell them to rise from their beds and work.
It is to be hoped that the newly established disability benefits forum will achieve its aim. It would be nice to think that it will go some way towards rebuilding trust between those who are disabled, their organisations and the DSS itself. However, I suspect that it will take a very long time to rebuild that trust. I should be grateful if the Secretary of State told us, in line with the report's recommendations, what action she has taken to review the rules of conduct and good practice for general elections, to minimise the risk of such errors of judgment occurring in future.
Then there are smart cards—which are not so smart, as it turns out. The £1.5 billion contract awarded, in 1996, to ICL to computerise benefit payments at post offices is currently running two years behind schedule. By March 1998, only 40,000 claimants were using the new system,

compared with the 19 million people nationwide who should have been able to use it. Although it is claimed that the system will eradicate £150 million in fraud each year, the DSS has already incurred huge costs in consolidating all its benefits payments on to one central database, to make it compatible with the Post Office automation system. Although the costs may well be as much as £200 million—rather more than the Government are expecting to regain in combating fraud—the DSS is still waiting, as it will be waiting for at least another two years, for potential savings in reduced fraud to be made.
No one disputes the important and laudable objective of eliminating fraud. However, those examples illustrate how poor management at the Department has hampered efforts on that front and done little to enhance public confidence in or regard for the benefits system.
Then there was the Public Accounts Committee's report on the failure of the NIRS 2—national insurance recording system—project. The report highlights gross incompetence within the DSS. The Department awarded a contract on the basis of flimsy information and a rushed timetable. It failed to ensure that it was getting value for money, or to make contingency plans for potential delays in the project. It failed also to gain adequate compensation when the project did not start on time. The Contributions Agency itself assessed the proposals by Andersen Consulting as
technically only on the margins of acceptability".
It is quite clear from the PAC report that the agency's actions went beyond the margins of acceptability.
There have been failures even in implementing policy. Winter fuel payments have already been mentioned in the debate and are a case in point. For a start, the Chancellor's use of the description "pensioner households" caused much confusion at the DSS. Calculating payments using that definition required data correlation in about 15 million computer records, involving 15 qualifying benefits across nine computer systems. It was therefore no surprise to learn that, last winter, administration costs alone were 10 per cent. of overall expenditure.
On top of huge delays in sending out cheques, implementation was such a huge disaster that £1.7 million was spent on what should have been a totally unnecessary advertising campaign, telling people that it was all right to cash the cheques that landed on their doorsteps. Anyone would have thought that one could assume that it is all right to cash a cheque that lands on one's doorstep. The fact is that 40,801 invalid girocheques were sent out with an incorrect date on them; 649 pensioners received two lots of £50 payments; and in 434 cases, both the invalid and the replacement cheques were cashed. I understand that letters have now been sent out "inviting repayment".
What about the so-called crisis in welfare spending? Although for many years there certainly has been growth in welfare spending, growth is now levelling out. As a percentage of gross domestic product, social security expenditure in Britain is forecast to fall. By the Government's own figures, planned social security expenditure in 1998–99 is lower by £588 million than it was projected to be in last year's expenditure plans. The biggest problem that we face with such expenditure is not the total amount, but the failure to target benefits properly on those who need them most.
As has been mentioned, an estimated 1 million pensioners still do not claim the income support to which they are entitled and, as a result, do not qualify for other


associated benefits. As my hon. Friend the Member for Northavon (Mr. Webb) pointed out, the names of half those people have been known to local authorities for years, yet the Secretary of State is only just getting around to pilot projects to address the problem.
I should like to raise another aspect of all those failures—the fact that Conservative Members seem to have gained tremendous powers of hindsight since their defeat last year. Several of the schemes in which they correctly identified significant problems have at their root the way in which they were established under the previous Administration. In the case of the benefits integrity project, NIRS 2 or smart cards, it is no good their standing up and accusing the new Government of mismanagement, without acknowledging their own part in the problem. The Conservatives would do well to remember that some of the projects were set up years before the election.
In respect of the benefits integrity project, the Social Security Committee report described as "regrettable" the failure of the former Minister of State to consult disability organisations. Further, it stated that it was "totally unacceptable" to have formally launched the BIP before the general election and before incoming Ministers had had the opportunity properly to assess the project that was then set in motion. Perhaps the most important point to recognise is that many of the mistakes associated with the BIP occurred at the inception of the project. They date from the moment at which the previous Government failed to consult disability organisations, and ploughed on with the project without regard for the people it was targeting.
If we are talking about incompetence, Conservative Members might care to look a little more closely at the so-called incompetence index that they published last month. It was drawn up as an illustration of ministerial incompetence at the Department of Social Security. It refers to cold weather payments instead of winter fuel payments, which are a very different matter. If one is complaining about incompetence, it is important not to be incompetent. People who live in glass houses should not throw stones.
As the debate has developed, it has become increasingly clear that it is the second social security debate introduced by the Conservatives in two weeks that is rapidly turning into something of an own goal.

Mr. Wicks: I did not plan to intervene, as I hope to catch your eye later, Mr. Deputy Speaker, but to be fair, past Ministers under the previous Administration dealing with the benefits integrity project made it clear that there should be consultation with organisations representing those with disabilities. That instruction was ignored by civil servants in the interregnum between the previous Administration and the present one. The Select Committee—its Chairman is here—did not attach blame to past or present Ministers.

Mr. Rendel: I am grateful to the hon. Gentleman for his intervention, but I shall continue with the important point that I was making, which is still valid. The Conservatives have to take much of the blame for what has gone wrong. The motion, which attacks the Labour Government for their incompetence, must be one of the

most hypocritical that any Opposition party has ever dared to bring to the House. As such, it does not deserve and will not get any support from the Liberal Democrats.
It is true that the Government did not start with the best hand. The Secretary of State was right when she said earlier that the Government had inherited a social security system that was in a mess. Indeed, in social security, as perhaps in no other sector, most of us felt that the Government had a right to say as they came to power, "Things can only get better," but that was before we had lone parent benefit cuts, council tax benefit cuts, the benefits integrity project and the incompetent handling of the NIRS 2 project.
Unbelievable as it may seem, in the very area where there was total cross-party agreement that reform was needed, the Government succeeded in doing what most people would have thought impossible—making things worse. It is no credit to the Conservatives, most of whose plans have now been implemented by the Government with dire results, but it is certainly no credit to the Government either. If, as expected, the Secretary of State is soon removed from her post, it cannot be said that many Opposition Members, or, I suspect, Labour Members, will be sorry to see her go.

Mr. Terry Rooney: When I read the motion last week, I wondered what on earth was going on. I could not believe the words on the Order Paper. Then I realised that there must have been a mind block among the Conservatives—they had forgotten about last year's general election, thought that they were still in power and were referring to their last year in office.
When we talk of confusion, contradictory policies and incompetence, the jewel in the crown must be housing benefit. In 1982, when my local authority received guidance from the Department, it was told that it would probably require six staff to administer the new benefit. Within 12 months there were 154 permanent staff and 48 part-timers—somewhat more than six. As for being contradictory, for many years Housing Ministers were deregulating rents, forcing up council rents and lowering grants to housing associations—which also drove up rents in that sector—while social security departments were picking up the bill. Short-term thinking led to long-term debts; there was no co-ordination or co-operation.
Before the Social Security Act 1988, there used to be a wonderful document called the yellow book—a simple volume detailing social security. The 1988 Act introduced the blue book, which comprised 17 volumes detailing the law relating to social security. In addition, there was the adjudication officer's guide, which now consists of 24 volumes. That is the legacy of 18 years of Conservative government.
The most outrageous provision in the 1988 Act was the brainchild of the former Prime Minister. The social fund was a wonderful new system of lending money to the poor to pay for their most basic needs. It now has administration costs of 37 per cent. of money that it handles. By any stretch of the imagination, that is incompetent and contradictory.
Moving on to the 1990s, who can recall with glee the disability living allowance, which is both incompetent and contradictory? It is contradictory to the principles of care in the community and is an example of incompetence on a grand scale in its establishment, implementation,


organisation and administration. The classic example, which I shall not dwell on because it hurts, was the Child Support Agency. After three major pieces of legislation in seven years, only one in eight single parents get the full maintenance to which they are entitled.
It took until 1996 for the previous Government to recognise that legislation was required to deal with fraud. It took them 17 years to introduce legislation to tackle that major issue. In the same year, they introduced incapacity benefit and the dreaded, discredited, disjointed all work test—a terrible way to assess whether people were capable of work.
The biggest indictment of all of the previous Administration has to be their treatment of the staff who work in the Benefits Agency. When the Conservatives left office, there were some 62,000 staff in the Benefits Agency. More than 5,000 of them were temporary and 13,500 had fewer than five years' service. There was a constant drain on the staff, as people were totally disgusted with the way in which they were treated. Training budgets were slashed, and training became a business unit, which had to attract customers from different parts of the Benefits Agency. As that was in the middle of the three-year plan to reduce running costs by 25 per cent., no one bought in training, and the staff became further and further removed from the legislation that they were being expected to implement.
As a result, decision making went down the pan; it became hit and miss. The incidence of violence against staff was intolerable. Morale was at rock bottom. Decision making went out of the window—so many people appealed against wrong decisions that they now have to wait 10 months for a tribunal. For seven successive years, the National Audit Office failed to sign the Department of Social Security accounts because of confusion, contradictory policies and incompetence.
The Conservative party legacy was inertia in the Department, the dead hand of dependency on claimants and an inactive service that did nothing to help people, but merely served the bureaucracy. Between 1979 and 1997, the social security bill increased in real terms by £43 billion—the only commensurate increase was that in the numbers of people living in poverty. The service did nothing except to drive people further into desperation. For the Conservative party to table such a motion after its 18-year stewardship of the social security system is the height of hypocrisy.

Mr. Archy Kirkwood: I welcome the opportunity to have another debate on this important subject. In tabling the motion the day before the House is told the outcome of the departmental spending review, the Conservative party show a brilliant sense of timing. Arguably, the most important thing that the Secretary of State does in any year is to have a battle with the Treasury over the departmental budget. We should see the results of that tomorrow, so to discuss social security tonight on an Opposition Supply day is premature, to say the least.
Many interesting things have happened in the past 12 months. The Government's welfare-to-work scheme is very important, especially in the long-term cultural shift that I hope it will achieve. It is not pejorative to say that the jury is still out on the scheme's success, but the policy is courageous—the Government have taken the debate a long way—and I wish it well.
The Government badly misjudged their policy on single parents, and they have wholly failed to correct their mistake. The Green Paper contains much that is of interest. The success measures, in particular, are an interesting tool for future policy development, although it remains to be seen whether we have got them right. Nevertheless, they represent an interesting departure, and I hope that the whole House will apply its collective mind and will to making the best of them.
I wish the Minister well in his deliberations on pensions reform. The delay in the deployment of policy is beginning to become a wee bit worrying. I am known as someone who is always in favour of hastening slowly and taking the appropriate amount of time to get things right, but there are worries that the delay is becoming a paralysis.
We must not forget the recommendations of the pension provision committee, which is admirably chaired by Tom Ross. There are two sides to pensions policy; the Minister is interested in developing stakeholder plans, but we must also remember the current pensioner population. Some of the committee's recommendations provide important lessons that we should all take on board. I see some Labour Members waving copies of the report, so I look forward to their contributions.
The introduction of tax credits also represents an interesting and potentially important departure, although the detail may thwart some of the Government's more laudable aims. In particular, there are some real misgivings about the details of the proposed disability tax credit for disabled people.
Much has happened, and much has yet to evolve from the Government's plans. I want to look forward and to concentrate in particular on the Government's plans to work with the Benefits Agency to promote the notion of modern service, which I believe to be an important part of the Government's programme. The administration of benefits must be simplified; administrative systems must be put in place that can deploy modern benefits efficiently. The system must be transparent to claimants and proof benefit eligibility gateways against the fraud about which we are all rightly concerned.
I am nervous that the comprehensive departmental spending review will say that the Department will have to pay for its administrative budget through savings from fraud. The Government are now saying that estimated losses to fraud have increased from £4 billion to £7 billion, but that figure is notional—I would dearly love to see the methodology tightened up, so that the data were more robust and policy makers could make more rational and sensible decisions.
To tell local authorities that, if they drive down fraud by 50 per cent., they can keep 10 per cent. of the money they save is to invite them to look for fraud. However, as the Select Committee's report on the disability living allowance showed, there is a fine line between inaccuracy and fraud. People may not intuitively perceive that they need to report changes in circumstance, so they may claim benefit to which they are not entitled, but whether that is fraud depends on whether they are deliberately deceiving the system. It is hard to know how central Government can produce a policy to deal with fraud, but we must be careful about saying that fraud costs £7 billion and that everyone is at it, which stigmatises people who need to claim benefit.
We must adopt a balanced approach. We should concentrate on the prevention rather than on the detection of fraud, and I welcome the fact that the Green Paper does that. However, fraud will not be detected until the administrative budget can pay for data matching, home visits and all the other mundane, run-of-the-mill matters that any ordinary private business would have to attend to if it were to have any chance of solving such problems.
I fear that tomorrow the Treasury will say that the programme of change and the 25 per cent. reduction in administrative budgets over three years—which is now beginning to bite into the bone, not the fat, of the Benefits Agency area offices—will have to continue.
It is absolutely essential that, in applying for benefits, people can act as they do when they buy an insurance policy. They phone up and speak to operators who have a screen in front of them. The form is filled in and sent out to be signed; when it returns with the accompanying documents, it is processed. That is the way in which modern commerce deals with the equivalent of a benefit application. With its current budget, the Benefits Agency is light years away from that level of service.
It is senseless for jobseeker's allowance to be spread across the Department for Education and Employment and the Benefits Agency. It is madness for the Department to act as a gateway and the agency as a processing arm. That is yet another example of how the previous Government could never make up their mind. I do not care which way it goes, but the Department or the agency should be assigned the whole process.
In a Benefits Agency office the other day, I saw an officer holding a sheet labelled "Workaround 115". A workaround is what the staff have to do to make the computer system get round a procedure that it was not designed to do in the first place. Cheat sheets show staff how to get round the inadequacy of the software. They spend more time on finding workarounds than on almost any other task.
My hon. Friend the Member for Newbury (Mr. Rendel) mentioned the plastic benefit card. The delays are worrying, in terms of both efficiency and combating fraud. It is a classic case of a project that should be given high priority.

Mr. Duncan Smith: Today, I received a reply to a specific parliamentary question about what action was taking place: the Minister said that there was none.

Mr. Kirkwood: I hope that the Government will consider the issue, which I do not think is in any way party political. I remember the former Secretary of State, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), waving a plastic benefit card in a splendid photo-opportunity, but he would not look quite so splendid if he did it again now, and neither would any current Minister. I hope that something will be done soon.
The access to corporate data schemes—the so-called Accord system—are also in danger of going wrong. I want to try to encourage Ministers to look differently at the project. As I understand it, it is no more or less than a procurement exercise. If we cannot get the three private sector consortiums to come up with a complete redesign that goes right through from the local office to the

over-arching system, buying a new set of computers and a software application to be used locally will not realise the potential of the experiments.
I am in favour of benchmarking, and a lot can be learned from the private sector, but we must be careful about the proprieties of the contribution of Benefits Agency staff. I hope that I am wrong and that the Accord process is not simply a way of enhancing service delivery at area level. I hope that it will be an intrinsic part of the future development and simplification of the whole benefits programme.
The Green Paper on fraud was published today. My local authority has been struggling in an attempt to work out how it can take part in the so-called benefits verification framework, which would allow it to bear down on council tax and housing benefit fraud. I am told that the estimated cost for the council to introduce the framework is about £110,000, while the Department's subsidy is only £16,000. The council estimates the recurring cost at £250,000 per annum, for which it will receive a maximum of £40,000 from the Department, if it does everything 100 per cent. the way that the Department wants.
I do not know how accurate those figures are, but they are frightening. The scheme is voluntary at the moment, and there is no way in which we can persuade local authorities to get involved if that is the difference between what they are offered and what they estimate that the cost will be. Everyone can see the need for the scheme, although it may be that the Department has gold-plated it. The practice is everything: it is all very well having fancy Green Papers and great plans—we all support them—if cash-strapped local authorities cannot implement them.
There is a lot of work to do, and with a wee bit of good faith we can make some improvements. The Government need to be realistic about how we need to spend to save. The Treasury acknowledges that. We need to put more capital expenditure into the benefits system so that we can simplify it for the long-term benefit of everyone, including the claimants.

Mr. Malcolm Wicks: It is a privilege to follow the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood)—my hon. Friend—whose chairmanship of the Social Security Select Committee we all appreciate, given the challenging agenda that we have.
I always welcome a debate on social security, although my first instinct was to regret the fact that the official Opposition had not tabled a motion that looked to the future, wanting instead to dwell, in a very partisan way, on the immediate past; but, on reflection, it is useful to have an opportunity to scrutinise carefully the mismanagement of the Department of Social Security over the past 20 years, because in considering future challenges we need to understand what has gone wrong in the past.
There is a sense in which the time span is even longer, although there is no time to dwell on all the history. It is half a century since the foundation stones of a modern welfare state and a modern social security system were laid. The first key foundation stone was a relationship between work and welfare, which is a modern theme and challenge, and in those days the assumption—of Keynes, Beveridge and many others—was that we could afford a


decent social security system only if the foundation stone was full employment. Many politicians of all parties accepted that. The roll call includes not only Bevan, Attlee, Beveridge and Keynes, but Conservative leaders such as Harold Macmillan, who, leading Governments in the earlier post-war period, recognised that full employment was important.
The second foundation stone was an ethical one, involving national insurance. It was said that all citizens had a duty and a responsibility to pay contributions into a community chest, and had the right to draw out of that chest in times of need, both when they were old and when they became sick or unemployed.
At a time when we are trying to recreate a sense of honesty and fairness in our systems, it is useful to look back to that age. There was a safety net—national assistance, which is now called income support—based on a means test, but it was meant to be for the few, not the many, to coin a phrase. It has turned out very differently.
I welcome the Opposition's debate. The abandonment of the goal of full employment during the Thatcher era was crucial. Suddenly, the state did not agree with Macmillan and Attlee and other, wiser people. It was no longer the job of the state to maintain full employment. It was thought that the market would try to create full employment, but it was not the Government's job to do so.
The Thatcher Governments sought to set people free from the state, but, with growing poverty and inequality, the paradox was that many more people found themselves totally dependent on the state for their income during the Thatcher and Major years than ever did in the wicked days of social intervention. The number of those dependent on income support doubled during those years, from one in 12 of the population to one in six. The irony is that Thatcherism created the very dependency state from which it had promised to set people free. Perhaps some apology should be made from the Conservative Front Bench.
One of the most appalling statistics I have ever read came in an answer to a parliamentary question late in the previous Parliament. I asked how many babies in Britain were born to parents on income support, or on family credit because their wages were low. The answer was one in three. We all aspire to do well for our children, but the poorest in Britain are the new-born. What kind of society is that?
We need a debate on the mismanagement of social security over recent years. The social security budget is distorted if we spend less on insurance benefits and more on means testing. Some 35 per cent. of social security spending is devoted to means-tested benefits. In 1979–80, the figure was quite high at 16 per cent., but it doubled during the Conservative years, and with that came poverty traps and disincentives that all of us should deplore. Fraud also grew because of the growth of means testing.
Sadly, former Governments lowered their guard against fraud by cutting the number of home visits, which was a cardinal error. Criminals—those who make multiple claims, and landlords who defraud the system of thousands of pounds a week—saw a new market for their operation. It is controversial to say so, but the climate of division and greed that existed during the Thatcher and Major era, when there was, apparently, no such thing as society, led to a culture of dishonesty among some people. If it was okay to defraud the tax system, some thought, it was also okay to defraud the social security system
The new Green Paper on benefit fraud is crucial to undoing much bad work. Its emphasis on deterrence, detection and prevention is important. In creating new benefits such as the working families tax credit, which the Select Committee is currently considering, we must try to design fraud out. That is easier said than done, but fraud must be one of the criteria in policy design.

Mr. Webb: The hon. Gentleman mentioned the growth of means testing. Is it not simplistic to say that that means testing is always bad? The working families tax credit is family credit by any other name, although it will be accounted for differently. It is still income-dependent. As well as increasing that category of means testing, the Government will help pensioners to claim more income support, which will mean more spending on means testing. Both those policies are presumably welcome to the hon. Gentleman.

Mr. Wicks: The hon. Gentleman knows that I am anti-means tests by instinct. I am a universalist, and if that is old-fashioned, tough. The working families tax credit is an ingenious new method of targeting without the crudities of a means test. Income taxation is a means test, but the Chancellor is developing a new way, through what some of us know as fiscal welfare, to target the poor, not just benefit the rich, through tax reliefs and allowances.
On issues regarding old age, I welcome attempts to use data matching and local authority records, as the hon. Member for Northavon (Mr. Webb) has suggested, to help people—often in their 70s, 80s or 90s—who should be claiming income support. Like the hon. Gentleman, I have an interest in alternative methods of helping the elderly, and I wonder whether there should be a pension premium—perhaps on a cohort basis so that it could be phased out—for people over 80, who tend to be the poorest among our elders.

Mr. Letwin: The hon. Gentleman has a distinct and welcome penchant for honesty. Can he honestly persuade himself that the working families tax credit does not involve a means test?

Mr. Wicks: The Select Committee is considering how the credit will work, and I see it as at least the beginning of an attempt to use the tax system to target people on low incomes who have caring responsibilities, such as parents, without the crudities of a means test.

Mr. Letwin: It is not the tax system. At the negative end of the tax system, there is a withdrawal rate, exactly as there is for means testing.

Mr. Wicks: Questions remain about the withdrawal rate, but withdrawal is being done far more sensitively than with some of the crude means tests of the past. We are in a new phase in the history of social security. Can we use the tax system for fiscal welfare that targets the poorest? There is a way to target without having the crudities of the old-style means test. The Select Committee is examining working families tax credit as honestly as it can. I am glad to be called honest by the hon. Member for West Dorset (Mr. Letwin); he will receive no solicitor's letter from me for saying that. However, we must keep an open mind.
In further honest pursuit of the Conservative record on social policy and mismanagement of social security, let us consider pensions mis-selling, which is one of the great scandals of the post-war period. Apologies are often in fashion now; tonight might provide an opportunity for the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) to clear his party's conscience about pensions. We all know what happened. The previous Government suddenly discovered personal pensions and sought to persuade all sorts of people to buy them. That persuasion was readily taken up by pension companies that mis-sold personal pensions to people who were seriously concerned about security in their old age.
The arithmetic in this area is breathtaking. I consulted the Library for a briefing. The Financial Services Authority is trying to sort out the scandal. It reckons that 640,000 people will be covered under phase 1 of its work. That is likely to cost the pensions industry £4.5 billion, which equates to an average of about £7,000 per person. The FSA is now on to phase 2, under which 1.8 million people will be covered. It reckons that those 1.8 million people comprise 985,000 transfers—people who transferred their company pension entitlements into personal pensions, which is nearly always a mistake—682,000 non-joiners who were eligible to join a company scheme but who were advised to take out a personal pension instead; and 154,000 opt-outs who were persuaded to leave occupational pension schemes in order to start personal pension schemes.
It is now estimated that the pensions mis-selling scandal will cost the industry £11 billion. I have met many of the people—such as nurses, police officers and teachers—who are behind that disturbing arithmetic. They had decent occupation pension schemes but were persuaded by salesmen, acting as a kind of army for Tory Ministers, to move out of occupational pension schemes and into personal pension schemes. It seemed attractive at the time, but it turned out to be not fairer but fouler.
We all know that child maintenance is a difficult subject. However, from the start, many people—including myself—warned the then Tory Government that they were making mistakes regarding child support, not in terms of the principle of parental responsibility, which we all support, but in terms of the mechanisms. A particular mistake was that there was nothing for the seven out of 10 lone mothers on income support or for their children. The decision to knock £1 off income support for every £1 of child maintenance collected led some to dub it an Exchequer support agency rather than a child-centred policy. It is about time that children got a look in, and I am pleased that they will as a result of the new Green Paper. This is a case study in social security mismanagement. The Conservatives had stewardship of the system for many years, and child maintenance was an incompetent shambles. Some honesty—I use that word again—is in order here.
One of the great features of that period was the way in which it affected the expenditure of public moneys. We know that the Government have great priorities in terms of education, health and social care. We are devoting one third of total public spending to social security. At the beginning of the Tory reign, that figure was one fifth. There are major challenges ahead, and I know that the rhetoric is easier than the practice. However, I think that

the Tory years are associated with galloping poverty. The challenge for the new Government⁁I see the policies being put in place—is to promote opportunity.
The Conservative years are associated historically with mass unemployment. The challenge for Labour is to promote training and work: what we call the new deal. The Tories introduced and defended, year after year, the catastrophic Child Support Agency. The challenge for my colleagues on the Front Bench is to introduce a fair and efficient child-centred child maintenance service. I think that the policies in the Green Paper are correct. I only add modestly that a change to the agency's name would herald a new era.

Mr. Loughton: The people's Child Support Agency.

Mr. Wicks: I thank the hon. Gentleman for that sensible contribution.
The Tory years are associated with increasing fraud in our social security system. I take the point raised by the hon. Member for Roxburgh and Berwickshire that the difficult issue is how to say that fraud is wrong but that it is right and proper for people to collect benefits to which they have a claim. That is a difficult operation, but we must do it. It is all about bringing honesty and integrity into the system.
Over the past 18 years, until May last year, what we called social security was more an indicator of social insecurity in terms of the money spent and the distortions regarding means testing, disincentives and dishonesty. My colleagues on the Front Bench face a major challenge in creating a system that we could truly describe as social security.

Mr. Howard Flight: I cannot believe that the Secretary of State thinks that what has happened in the past year is even close to what the citizens of this country expected of the Labour Government in terms of social security reform. People expected vision from the Minister for Welfare Reform. They expected a radical approach that they thought would come more easily from a Government of the left than from a Government of the right. People expected a reduction in the cost of social welfare, which they expected to be more focused on those in need, and in the unnecessary cost of recirculating citizens' taxes back to them. They expected an updating of, and clear decision on, national insurance.
The hon. Member for Croydon, North (Mr. Wicks) said that expenditure went up from a fifth to a third of all Government expenditure. That was essentially because of changes to the global economy. Continental Europe has had even worse rises in unemployment and welfare expenditure. A Government who feel that membership of the euro is likely to be helpful in achieving Keynesian full employment have got that one very wrong.
It is not only a matter of the painful level of unemployment of the early 1990s, and, indeed, the early 1980s, when economies were restructuring. We are at a relative cyclical low. As in America, unemployment is below 5 per cent., but we go on pumping in more than £100 billion per annum. The mounting expenditure is not predominantly the result of high unemployment.
I cite also the perspective of the majority of the country, the majority of middle-of-the-road, average, husband-and-wife families bringing up two children. They expected


reforms that did not leave them paying more and more for other people and subsidising the bringing up of other people's children. They expected a fairer deal for themselves. Many of them voted against the previous Government. They felt that they picked up the bill for many things that had gone wrong in our society over the past 15 years.
I was appalled by what the Secretary of State had to say. She almost seemed to be saying—I am not quite sure what she was saying—that the key reform was to help lone mothers and to modernise the welfare system to take account of the fact that women worked and that an increasing number of women brought up children by themselves. I do not believe that that is what the country expects of the Government.
There are two aspects to the subject of single parent families. First, there is the breakdown of marriage. The community fully supports and sympathises with wives and mothers abandoned by their husbands. The other aspect is the voluntary choice to have children alone. I do not believe that women who make that choice have the support of society. As far as possible, society would wish children to continue to be brought up by a two-partner unit, whether formally married or not.
The reality is that £7 billion of expenditure has been added, and another 400,000 people have been brought into dependency. The redistribution agenda of the Chancellor of the Exchequer, and not the Minister for Welfare Reform, has guided what has happened so far. The radical thinking of the Minister for Welfare Reform has been somewhat stillborn. I would be sad if that thinking had no chance to bear fruit before the next general election.
I want to focus on some aspects of the working families tax credit, which unfortunately encourages some of the problems mentioned by the hon. Member for Croydon, North. It is axiomatic that a society that can afford it can make otherwise unviable family units viable by the transfer of resources. Society can do that in two ways: either by providing mothers with an income to stay at home and bring up their children, or by paying for child care and so allowing mothers to work. Those are forms of subsidy which are of equal inherent value and there is no moral argument for choosing one over the other, but the Labour reforms clearly favour the latter course—to pay for child care and allow mothers to work.
It is both unwise and unfair not to take the view that a mother who stays at home to bring up her children is doing just as worthwhile and valuable a job in society. I believe that mothers will respond by working, even if the work they do is not implicitly of greater value to society than the work of looking after their children, which they will hire other people to do.
What is wrong are the system's disincentives to sustain the relationship between the parents of children. The measures have increased the income to those without a partner, and the rate of withdrawal of subsidy has been lowered. The net effect is that, if a woman's husband or partner is earning the average wage of £330 per week, unless he spends less than about £100 a week on his own personal expenditure, he is of no value to that family—the father on the average wage is of no value to the mother and their children. That comes about because the 55 per cent. withdrawal from husbands' after-tax income is subtracted from family credit. If the husband leaves, the wife receives the couple's married allowance. There is

massive incentive to cheat, because, if two people are not living together as husband and wife for tax and welfare purposes, they are better off by £107 per week—38 per cent. better off.
The bottom line about what is wrong is that the working families tax credit is based on family income, whereas income tax is based on individual income, but the two systems have been intermixed. If a couple can present themselves as one absent parent and one lone parent with an income of £250 per week, the state will make them better off than a couple who are together with an income of £450 per week. Can that be right? I thought that new Labour and the Prime Minister were committed to the family unit and to sustaining it, but the biggest welfare reform of the past year appears to introduce both a major disincentive for having a two-parent family unit and a major incentive to commit fraud.
Yes, mothers will be better off and they will be encouraged to work, but the marginal value of a husband has been substantially reduced. That is the price of three features of the system: first, that the benefits are paid to families, rather than to individuals; secondly, that families receive a higher basic income; and, thirdly, that the rates of withdrawal will be lowered. Once those aspects are factored in, the net effect is as I have described. There is cross-party agreement on the need to get rid of poverty traps, yet, post-family credit, the number of households now facing marginal tax rates of 50 per cent. rises from 800,000 to 1.3 million; and, according to the Institute for Fiscal Studies, the figure has the potential to rise to 2 million. The Government have enormously increased such disincentives.
I believe that people expected the Government to act urgently on their stakeholder pension proposals. There are about 7 million or 8 million people without pension arrangements, but the Government have boxed themselves in. They would have been wiser to support the previous Government's proposals. What has happened? The Green Paper has been deferred again and again.
I suggest that the problem is that the Labour party is having difficulty in biting the bullet that stakeholder pensions will have to be compulsory if they are to work. If they are not compulsory, it is clear that people will not willingly sacrifice some 12 per cent. of today's income when they know that the state will have to look after them if they do not do so. The Government have had advice to that effect from almost all the professional bodies that they have consulted, but they are reluctant to introduce compulsory arrangements, so they are dithering.
When I talked to people who voted for the Labour party at the previous election, I found that many—in particular, surprisingly, young people—are most disillusioned by the Government's failure to get on with pension reforms and their stakeholder pension proposals.
It is a great disappointment to the country and to hon. Members in all parts of the House that a Government with such a large majority and mandate have failed to get on with the welfare reforms that they painted in a vision for the nation. They have been sidetracked into the Chancellor's specific redistribution programme, and I fear that they have now lost the initiative until the next election.

Mr. Phil Hope: We are debating an Opposition motion which claims that the Government have wasted their first year in office and failed to reform the social security system. I find that an intriguing notion when we compare our inheritance from the previous 18 years of Conservative stewardship of the welfare state with the action that has been taken by the new Government in their first 12 months.
We have inherited a mess from the Tory Government. Millions of children are growing up in poverty. Millions of pensioners are living below the poverty line. There has been rising inequality between the richest and poorest pensioners and, if nothing changes, that will continue. Thousands of disabled people were written off to live on invalidity benefit with no hope for the future. Millions of lone parents were made scapegoats by the Conservatives simply because they are lone parents and left with no hope for the future. The establishment of the Child Support Agency, as I am sure all hon. Members know from their surgery experience, has created massive despair and distress among families throughout the country. There was also the scandal of pensions mis-selling, which the Conservative party encouraged and failed to stop when it realised the magnitude of the disaster that it had caused.
The Conservative party's 18-year stewardship was not only incompetent but vindictive, divisive and self-destructive. Indeed, it would have gone further. A pamphlet, entitled "Who Benefits?", written by the shadow Secretary of State for Social Security, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), shows that, if the Conservatives had remained in government, they would have called for the effective abolition of the welfare state. The hon. Gentleman stated:
We envisage a future system where welfare is paid out of private insurance contributions for the affluent majority, alongside a state benefit system which protects and caters for the needs of those for whom private insurance is not an option.
In effect, there would be one rule for the rich and another for the poor.

Mr. Loughton: Does the hon. Gentleman agree with the Prime Minister's comments in the foreword to the Green Paper that was published in March, which state that the Government intend the welfare state to remain
a low-grade safety net for the destitute"?

Mr. Hope: The hon. Gentleman has failed to understand, or even to read, the Green Paper on welfare reform, which is one of the most radical documents to emerge from any Government this century. It takes forward a programme of welfare reform that will enhance people's lives and help not just those who have to rely on the welfare state for their income but the whole community. It is essential that a welfare state not only meets the needs of those in poverty but has the full support of the whole community—[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Member for East Worthing and Shoreham (Mr. Loughton) must behave himself.

Mr. Hope: Thank you, Mr. Deputy Speaker.
Having inherited that appalling crisis, the Government have had to do two things simultaneously: first, they have had to act immediately to tackle the poverty that they

inherited; and, secondly, they have had to lay down the foundation for a new direction for the welfare state in preparation for the next millennium.

Mr. Rendel: I am interested in the idea that the Government acted immediately to overcome the poverty that they inherited. Is that why they cut lone parent benefit?

Mr. Hope: It might have been helpful if the hon. Gentleman had waited until I had finished speaking about the action that the Government have taken in their first 12 months in office to tackle the crisis that they inherited from the Conservatives. For example, in the Budget we increased child benefit by £2.50 a head per week for families whose oldest child is under the age of 11. That is the highest increase since child benefit was introduced.
We have introduced the working families tax credit and the child care tax credit, which, combined, mean that the poorest 20 per cent. of families will be on average £500 a year better off. For young people whose lives were decimated by the Conservatives and who were thrown on the scrap heap when they left school, we have introduced the new deal, which provides them with jobs, training, opportunities and hope for the future.
For parents, we have introduced the national child care strategy, which will provide affordable and accessible child care. It will enable parents—whether they are lone parents or two-parent families—to work and earn income to lift their families out of poverty. We have provided a new deal specifically targeted at lone parents, which many hon. Members have already said is a successful programme of support to help lone parents to work. The White Paper on "Fairness at Work" spells out a range of family-friendly policies to enable parents to work.
Another group that was hammered by the Conservatives in their 18 years of stewardship of the welfare state is the disabled. We have introduced the new deal for disabled people, to help those who can work to get off the dole and into work. We have introduced the disabled person's tax credit to give disabled people a fair wage, so that they have a decent income on which to live. We have made a commitment in the Green Paper on welfare reform to provide universal disability living allowance and attendance allowance. Moreover, a disability rights commission will be set up to establish firm rights in terms of security of employment and services for disabled people.
We have introduced winter fuel payments of £20 for all pensioner households and £50 for all pensioner households on income support. That is universal support, targeted to meet the needs of the poorest. In addition, we have cut VAT on fuel, which was introduced by the Conservatives when they were in power, and introduced a zero rating on the gas levy.
Those are tangible benefits for disabled people, pensioners, children, parents and young people, all of whom were left in despair by the previous Government. Naturally, we must plan for the long term. Action is needed not just to tackle poverty here and now, but to prevent poverty from returning in the future.
I have already referred to the welfare reforms outlined in the Green Paper published earlier this year, which contains clear principles and a new direction to eliminate poverty in the future while tackling poverty today.


The Green Paper on the Child Support Agency also introduces radical reforms. One of its outcomes will be to raise the incomes of parents on benefit by £l0 a week, as they will get the first £10 of maintenance that is paid. That is extra money for the caring parents in a relationship.
There is to be a new Bill on pension sharing to help divorced women and to ensure that they are not disadvantaged when they reach pensionable age. As other hon. Members have said, we also have new proposals to tackle benefit fraud.
Much more important, the combination of all those measures—active communities, programmes, welfare state support and the new deal—will mean that people will be in work, self-sufficient, with incomes that make work pay. There will be voluntary action, with active citizenship and new schemes such as the millennium volunteers, which my right hon. Friend the Secretary of State for Education and Employment is introducing, and which will engage young people—and older people, in years to come—in actively supporting and regenerating their community. Reform of the welfare state is not only about income, but about people's lives—people having the confidence, ability and independence to live positive lives.
Much remains to be done. I look forward to the Green Paper on pension reform—which will introduce the new, value-for-money stakeholder pension and the new citizenship pension, which will cut the routes to pensioner poverty for women—because we need a pensions strategy for the future that can cope with a slowly aging society without placing a burden of unsustainable costs on our children.
I believe that, far from its having been a wasted year, as the Conservative motion suggests, the Government have begun to tackle the poverty that we inherited from the previous Government. They have also laid the foundations for wide-ranging reform to regenerate the lives of the families in most need and build a new welfare state, which has the support of the whole community.

Mr. Oliver Letwin: The debate has been most interesting, because of what it has revealed about the gap between analysis and delivery. The hon. Member for Croydon, North (Mr. Wicks) gave an eloquent disquisition on what he regarded as the major disadvantages of the welfare system that the Government inherited. Although many of us do not go the whole way with him in his attribution of cause, many Opposition Members, as well as Labour Members, would agree with him that the welfare state, as the Government encountered it on coming to office, was deficient.
The Minister for Welfare Reform wrote a series of pamphlets and books describing what he saw as the root cause of that deficiency. Many Conservative Members read those words, and I believe that we even understood them. More—we were persuaded by much of what is in them that, at root, there is a severe disadvantage in a welfare system that is a compound of means tests, a compound of disincentives and a compound of misincentives.
We understood that, when the present Government came to power, with the present Opposition in place, there was an historic opportunity—an opportunity to follow on from that analysis by delivering a new type of welfare

state, a welfare state that would not be a compound of such disincentives and misincentives because it would not have a plethora of means tests attached. It would have learnt the lessons of the past.
What has been interesting about the debate is the fact that no Labour Member has even attempted—I know that the Minister wants to speak urgently; perhaps he will make such an attempt, but I doubt it—to argue that the past year shows even the beginnings of such a radical overhaul. On the contrary, the Secretary of State told us at considerable length about marginal acts—acts which, on her reckoning, will affect 1 per cent. of lone parents, or which will slightly ameliorate the circumstances of old-age pensioners by helping them to pay their heating bills. They may or may not be important measures. They may or may not work. In any case, they cannot conceivably be represented, and they were not represented by the Secretary of State or by any other Labour Member, as deep or radical measures to change the structure of the welfare state.
That is sad, not only because the Government might have made such radical changes, but because the official Opposition would have worked with the Government to do that. It was perhaps the first time in British history since the war when a Government and an Opposition largely shared an analysis, and might have worked together to convert that analysis into action. That opportunity has been missed.
It is worse than that, because, as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) amply illustrated, in many respects—from the best of intentions, as has so often been the case—the Government have actually worsened the misincentives and disincentives. The apparatus of the working families tax credit and everything that goes with it deepen the extent of the disincentives to work and the misincentives vis-a-vis the family. My hon. Friend could have gone on to provide other examples. If I had the time, I would do so myself.
The tragedy is that the actions of the DSS over the past year have been governed by something outwith the Department that has nothing to do with the vision of the Minister for Welfare Reform. What is that outside force? It is, of course, the Treasury. What has happened to the Government is sad, but not unusual. The Department of Social Security has been bowled over and pushed to the ground by a Chancellor who has his own agenda, which has nothing to do with welfare reform in the radical sense.
I fear, therefore, that there will be no change and no eloquent defence from the Under-Secretary, because there cannot be change in the face of the force of the Chancellor, and there cannot be eloquent defence when the Under-Secretary knows that he would never be allowed to do anything that the radical programme of his right hon. Friend might have suggested that he should do. That is one of the great sadnesses which, for many Opposition Members, will abide throughout the lifetime of this Government.

Mr. Quentin Davies: This debate, although much too short, has proved to be revealing. We have had some interesting and memorable contributions
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who is generally regarded as an extremely able Chairman of his Select Committee, made


a number of good points, several of which I agree with. He made some telling criticisms of the Government and one or two criticisms of the Conservative party. I do not accept, however, that we should not have chosen today for the debate. He said that we should have waited for the Chancellor's statement tomorrow.
The official Opposition understand the Labour Government a good deal better than the Liberal party evidently does. The Labour Government always bypass Parliament; they never make policy statements to Parliament first. If one wants to know what policy statements will be made, one must read the press over the previous few days. If one wants to hold a debate while the matter is still active in the public mind, one must hold it the day before, not the day after, the relevant statement. If the hon. Gentleman wanted to know what the Chancellor will say tomorrow, all he had to do was read the Sunday newspapers yesterday. That is a regrettable state of affairs, and I agree that it is part of the perversion of the government of this country that has been brought about by the new Labour Government. I deeply regret it, but we have unfortunately to respond to such realities, unpleasant though they are.
The hon. Member for Croydon, North (Mr. Wicks), as he always does on such occasions, made a thoughtful speech, with feeling and considerable experience of these matters. I agree with much of what he said. My instincts, like his, are against means-testing. There is an interesting divide in the House. The hon. Gentleman, and my hon. Friends and I, are against means testing, as is the Minister for Welfare Reform.
In his book "Making Welfare Work", the Minister for Welfare Reform states:
A political party must first recognise how dire the problem is, acknowledge its scale, and set out a strategy which aims to replace means-tested dependency.
On one side, we have an interesting coalition between the right hon. Gentleman, the hon. Member for Croydon, North and Opposition Members, and on the other side the Secretary of State and the Chancellor.
My hon. Friend the Member for Arundel and South Downs (Mr. Flight) made an excellent speech, setting out in graphic detail the perverse effect of the welfare system on the family, and its equally perverse effect in encouraging cheating.
The hon. Member for Corby (Mr. Hope), who seems to have left the Chamber, made a speech which, I imagine, was delivered to him by Millbank tower. When he spoke of 18 years of Conservative government decimating people's lives, he was so over the top as to be utterly ludicrous. No more need be said about him.
My hon. Friend the Member for West Dorset (Mr. Letwin) made a characteristically forensic speech and, in a few minutes, succeeded in showing up some of the fatal contradictions in the policy positions taken up by the new Labour Government—and they will prove fatal.
Much the most revealing speech was made by the Secretary of State. I fear that it was clearly a valedictory speech, and it would be inhuman not to sympathise with someone who is about to be fired, for whatever reason. It is only right to allow anyone who is about to be fired a certain latitude in what she says by way of self-justification.
The right hon. Lady said, "No one will ever go back on the system that I have created." That was a pretentiousness too far. She obviously has a vision of the history of welfare in this country which involves Lloyd George, Beveridge, Chamberlain, Macmillan—I am glad that the hon. Member for Croydon, North mentioned Macmillan in that context—and then Harman. Perhaps she has a vision of the welfare history of the human race which involves Bismarck and Beveridge—and Harman. No doubt she regards her achievements of the past 14 months as eclipsing everything that all those statesman of the past ever dreamed of achieving.
The Secretary of State's imagination matches the extent of the disappointment felt by her colleagues about what she has achieved over the past 14 months, because she was given the important task of delivering three major new Labour promises. The first was comprehensive reform of the welfare system, the second was to decrease the share of national income spent
on the bills of…social failure"—
a reduction of the proportion of national income represented by social security spending—and the third was to deliver a range of enormously bold, extravagant and, I fear, entirely cynical promises to the older members of our society, and to old-age pensioners in particular.
What has the Secretary of State delivered? She has delivered a memorable administrative failure. We have heard this evening about cheques going out and bouncing, and cheques going out two or three times and being cashed, costing the public purse a lot of money. That may seem like small beer, but it shows the general spirit in the Department which she is supposedly administering.
We heard most from the Secretary of State about the one project that she appears to have brought forward—the new deal for lone parents, which so enthused lone parents that three quarters of them did not even bother to respond to letters inviting them to interview. We have agreed that the success rate is about 1 per cent. or, at most, 1.5 per cent. The right hon. Lady was extremely revealing in refusing to tell me, following an intervention, what are her targets; if she has none, she clearly has no control and no way of measuring the success or otherwise of the project. She has reinforced the impression gained by many of us over the past few months that this is nothing more than a gimmick, and a rather cruel gimmick, at the expense of single parents.
On comprehensive welfare reform, we have had a joke—a vacuous document called, again pretentiously, "New Ambitions For Our Country: A New Contract For Welfare". There is no new contract in the content, which is full of platitudes and questions, but has no substance at all. We shall never know whether the Minister for Welfare Reform had a real project in the paper that he put up to the Prime Minister last September, which was emasculated. Such a project is certainly not what has been provided to the British public.
What has happened in respect of reduced social security spending? The Labour Government are more than a year into their term of office, and they have gone in the opposite direction. The working families tax credit could cost up to £4 billion, and although getting people to claim benefits to which they are entitled, such as income support for pensioners, may be a desirable objective, it has a positive cost—about £2 billion, on the Government's own


figures. All those measures increase social security spending, whereas the Government were elected to reduce it.
Where are we after 14 months? The Government are going backwards: they are not fulfilling their programme. They have an even longer distance to travel in their remaining three or, if they are lucky, nearly four years in government. The scepticism in the country about whether they can fulfil those objectives as well as the other pledges in their manifesto is steadily increasing.
The right hon. Lady was appointed to fulfil a third set of objectives: the promises to older people. Throughout the last Parliament, the Labour party held out the prospect that, if they were returned to office, they would index the state retirement pension to earnings and not to prices.

Ms Harman: No, we did not.

Mr. Davies: The right hon. Lady shakes her head because it was not in the manifesto, but she knows that that is what hundreds of her colleagues were saying for years before the last election and during the election campaign. That has been a sad disappointment to millions of people who voted for the Labour party at the last election, and who had subtly been led to believe by all the spin doctoring that a Labour Government would index pensions to earnings, whereas they never had the faintest intention of doing so.
The Labour party said in its manifesto:
We will support and strengthen the framework for occupational pensions."
It has done exactly the reverse of its explicit manifesto commitment.

Shona McIsaac: Will the hon. Gentleman give way?

Mr. Davies: I cannot give way to the hon. Lady now. If she had tried to intervene a little earlier, I would have been happy to give way to her.

Shona McIsaac: On a point of order, Madam Speaker. I understand that the hon. Member for Grantham and Stamford (Mr. Davies) receives remuneration from National Westminster Securities. National Westminster sells pensions. I believe that he should not have put his name to the motion, nor should take part in the debate if he intends to mention pensions. At the very least, he should declare that interest to the House.

Madam Speaker: Those are matters for the Commissioner and not for debate. I presume that the hon. Member for Grantham and Stamford (Mr. Davies) has entered that information in the Register of Members' Interests.

Mr. Davies: Of course that interest is registered. Occupational pensions are not usually referred to in such debates. Many people have them, but I do not have one with National Westminster. If the Labour party was so worried about my remarks that it put someone up to make such a footling, time-wasting point, I must have been scoring a few runs.
Whereas the Labour Government were elected on an explicit programme of strengthening the framework for occupational pensions, they have done the exact reverse.

They have taxed occupational pensions in an unprecedented fashion. They are taking £5 billion a year out of personal and occupational pensions through the abolition of the dividend tax credit. They discriminated against occupational pensions as against personal pensions by not increasing the SERPS rebate to occupational pensions. It is not surprising that, as a result of a year of the Labour Government, the occupational pensions movement is declining. That is a great tragedy for our future, and one more broken promise.
The Labour manifesto said that we need higher levels of saving to provide decent retirement incomes. Once again, the Government have broken their promise. They need higher levels of saving, but they have taxed savings. That is hardly sensible.
The House hears almost every day of a new, broken Labour promise. We have heard of at least two today. Much of the talk today, of course, has been about a broken promise involving tuition fees but, over and over again, promises to older and more vulnerable people have been broken.
Let me close with one final new Labour broken promise. On 18 August 1995, the then shadow employment Minister wrote to a number of organisations representing the interests of retired people, saying:
Tony Blair has asked me to respond to your letter…regarding age discrimination in employment, in my capacity as Shadow Employment Minister…the next Labour Government will introduce legislation to make age discrimination illegal, just as discrimination on the grounds of race and sex are today.
We have not heard a word about that commitment, 14 months into the new Labour Government.
I ask the Under-Secretary, the hon. Member for Southampton, Itchen (Mr. Denham)—who will wind up the debate, and who has responsibility for pensioners, or purports to—to tell the House now whether that commitment is still valid, or whether it is one of the many promises that the Labour Government have broken. Those promises have been broken cynically, but not with impunity, because the public are not so easily fooled. If the record of the past 14 months continues, there is no doubt that there will be a record of broken promises at the time of the next election such as no voter has so far seen.

The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): After that speech, I begin to fear that rumours of a black market in Viagra may well be true. I hope that the hon. Member for Grantham and Stamford (Mr. Davies) will calm down before he goes home.
This has been a surprisingly good debate, in which a number of substantial contributions have been made. As we would expect, my hon. Friend the Member for Croydon, North (Mr. Wicks) provided a good historical overview, and was able to set the record of the last Administration in a wider context. My hon. Friend the Member for Bradford, North (Mr. Rooney) spoke of the importance of—among other issues—the staff employed by the Benefits Agency to the delivery of the welfare system that we want. My hon. Friend the Member for Corby (Mr. Hope) set out the history of the last Administration very clearly, and the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), the Chairman of the Social Security Select Committee, made a series of valuable contributions.
The hon. Member for Arundel and South Downs (Mr. Flight) also made some interesting points that were worthy of consideration. Although I do not agree with his prediction of the behaviour that would result from the working families tax credit, his was a thoughtful speech. His speech was about what the Government were doing. The premise of the debate called by his right hon. and hon. Friends was that the Government were not doing anything, and the only two speeches that were devoid of content, point or substance were those made by Opposition Front Benchers.
The hon. Member for Newbury (Mr. Rendel) summed it up very well when he said that, yet again, an Opposition day debate on social security had turned into an own goal. I noted the speed with which Conservative Members left the Chamber as soon as the opening speeches were over. I do not think that I have ever attended an Opposition day debate, in six years as a Member of Parliament, at which the only two members of the party that called the debate who were present were on the Front Bench. That, I think, is a measure of where the debate was leading at the opening—although a number of hon. Members in all parties developed it into quite a useful discussion.
It is a shame. The procedures of the House give the Opposition a chance to scrutinise and criticise the Government's record, and I do not think that any Government—certainly this Government—should be concerned about that; but these debates are a test of not just the Government's record, but the Opposition—of whether they have anything to say, whether they have a case to make and whether they can tell us, as they singularly failed to do, what they would have done.
The motion criticises welfare spending. The Conservative party should know because, under the previous Administration, social security spending spiralled and the costs of economic and social failure soared. The cost of social security soared by £43 billion in real terms—[Interruption.] Let me tell the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) what we said in our manifesto:
We will increase the share of national income spent on education as we decrease it on the bills of economic and social failure.
Over this Parliament, this Government will keep that election manifesto commitment—I am confident that we shall do so—but he must justify the previous Government's record.
Nearly 20 years ago, taxpayers knew that 25p in every pound that the Government spent went to health and education and 23p to social security. By the time that we were elected last year, 31p in every pound of Government spending was going on social security, but it would be wrong to judge the previous Government just by what they spent. What matters just as much is what happened to millions of people—to individuals, to parents, to children. Not just the cost, but the number of people who were being failed soared.
The number of people on income support doubled from one in 12 to one in six. By the time the previous Administration had finished, twice as many households had no one in work as when they were elected. The number of children being brought up on benefit had doubled: 2 million children of 1 million lone parents alone were being brought up on benefit. Nearly 1 million extra people of working age were receiving incapacity benefit.
That was a welfare system that was not working. It was not working for our society—a society that bore the costs of social exclusion, of young people who thought that they had no stake in our society. It was not working for taxpayers, who had to pay the bill. It was not working for many of those who had to rely on it.
We knew that that was not the welfare system that people in Britain wanted—whether they were paying for it, or dependent on it. We knew that the benefit system alone could not be the route out of poverty for so many children of so many parents on benefits, and I believe that they knew it was not the route out of poverty too.
We knew that 2 million disabled people of working age were working, but that another 1 million disabled people wanted to work. However, no one was giving them the chance to work, to enjoy equal rights and to feel that they were being treated as full members of society. We knew that the system was not working for those people who could not be expected to work because of their health or disability, or because they were retired. We knew that people who had to turn to the welfare system found that it did not seem to be working for them.
Too many people came to believe that they had more opportunity to commit benefit fraud than of earning an honest living. The previous Administration said that they wanted a benefit system where people helped themselves; they did. The organised gangs, the crooked landlords and, sadly, a minority of individual claimants helped themselves, and the previous Government did nothing about it.
The benefit system treated people only as claimants, not as individuals with hopes, aspirations and ambitions for themselves and their families. People did not get what they were entitled to. Perhaps 1 million pensioners, after a lifetime of work, bringing up families and living through war, did not receive even the income support to which they were entitled.
Therefore, as soon as we were elected, under the leadership of my right hon. Friend the Secretary of State for Social Security, with a whole ministerial team—

Mr. Quentin Davies: Will the Minister give way?

Mr. Denham: The hon. Gentleman did not give way in his speech, so I do not intend to give way in mine.
We set about changing and reforming the welfare system to make a reality of our principles and values: work for those who can and security for those who cannot. The hon. Member for West Dorset (Mr. Letwin) said that we had made and are making no changes, but that is not true.
I make no apologies for the fact that one of this Government's first actions was to invest in new opportunities for people who had been denied opportunities for too long. We invested the windfall tax on the privatised utilities to create new opportunities for young people, for older workers, for lone parents and for the sick and disabled. We gave young people the chance to have a job, to gain skills and to be a full part of society. At the same time—not in the welfare budget, but in the education budget—we invested to raise standards in skills, so that, as today's children grow up, they do not leave our schools with the same lack of skills, education and qualifications that their older brothers and sisters have faced.
We are extending the new deal's opportunities also to older people—who also should not be written off by the welfare system. We have set out to discover the best ways of enabling sick and disabled people to keep their jobs and to return to work. This week, we shall be announcing the first pilot projects in that programme.
In the new deal—which has been championed by my right hon. Friend the Secretary of State—we have said to lone parents, "There is an alternative to receiving benefit until your youngest child is 16. You can have a personal adviser who will work with you in dealing with the complexities of looking for work for the first time in years—to sort out training and child care and to understand working benefits."
In the welfare reform Green Paper, which was introduced in the House by my right hon. Friend the Minister for Welfare Reform, we have stated how the welfare system itself needs to be developed—so that the principle of personal advice tailored to the needs of individuals becomes a reality across the welfare system. We are also establishing schemes that will bring the Benefits Agency and local authorities together so that people are not faced with different systems and bureaucracies that cannot talk to one another.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) said that the Government are not moving ahead with technology. I tell him that people can now ring up to claim their pension. Someone will be at a computer screen to enter the information and send out a completed form. That is only the beginning of our plans. In nine pilot schemes—[Interruption.] There is some laughter among Opposition Members. Before implementation of the new system, about 40 per cent. of pension claims made on paper and posted had to be returned for extra information—at an administrative cost to the taxpayer, and a cost in inconvenience to pensioners. Using the new system, over 90 per cent. of new claims are accurate. [HON. MEMBERS: "What about the cheques?"] I shall deal with the cheques in a moment.
It is so symptomatic of the Conservative party's thinking that Conservative Members deride an improvement in service quality that helps to make the welfare system work for individuals and to cut the cost to the taxpayer. Now we know why so little happened over the Tory years.
Opposition Members asked about cheques, and said that people were worried about winter fuel payments not arriving. Under the previous Administration, for 18 years, no pensioner ever worried about winter fuel payments arriving—but they worried about their fuel bills, and about VAT on fuel at 17.5 per cent. Over 18 years, they never made an effort to help every pensioner household with its fuel bills. We have made that effort.
The hon. Member for Grantham and Stamford may think that the fact that one employee of a private company administering benefits transposed two digits and sent out some cheques that were changed within 72 hours should provide the basis for an Opposition day debate, but that just shows the ridiculousness of the Opposition's critique. Conservative Members did not mention a word of how they did not do anything to help pensioners with their heating bills or utter a word of apology for attempting to impose VAT on fuel at 17.5 per cent. They have only words of derision for the changes that we have already

made to create a benefits system that works for people. Conservative Members stand condemned by their own words.
I should like to ask Conservative Members a key question. For years, they derided Labour Members when we said that we should use modern technology to help the poorest pensioners. However, one week into our pilot scheme, we identified a Scottish pensioner who was entitled to income support. We encouraged her to claim that benefit and now, consequently, she is £51 a week better off. When Conservative Members tabled today's motion criticising our welfare spending—the House is entitled to know the answer to this question—did they want that woman to stop getting that money? Was it that pensioner whom they intended to criticise? Should that pensioner, so long neglected by the Opposition, go without once again? That is what lies behind their message this evening. Should the lone parents who are on average £39 a week better off, with the taxpayer saving £42 a week—

Mr. James Arbuthnot: rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 128, Noes 360.

Division No. 334]
[10 pm


AYES


Ainsworth, Peter (E Surrey)
Flight, Howard


Amess, David
Forth, Rt Hon Eric


Arbuthnot, James
Gale, Roger


Baldry, Tony
Gibb, Nick


Bercow, John
Gill, Christopher


Beresford, Sir Paul
Gillan, Mrs Cheryl


Blunt, Crispin
Gorman, Mrs Teresa


Body, Sir Richard
Gray, James


Boswell, Tim
Green, Damian


Bottomley, Peter (Worthing W)
Greenway, John


Bottomley, Rt Hon Mrs Virginia
Grieve, Dominic


Brady, Graham
Hamilton, Rt Hon Sir Archie


Brazier, Julian
Hammond, Philip


Brooke, Rt Hon Peter
Hawkins, Nick


Browning, Mrs Angela
Hayes, John


Bruce, Ian (S Dorset)
Heald, Oliver


Butterfill, John
Heathcoat-Amory, Rt Hon David


Chapman, Sir Sydney (Chipping Barnet)
Horam, John



Howard, Rt Hon Michael


Chope, Christopher
Hunter, Andrew


Clark, Rt Hon Alan (Kensington)
Jack, Rt Hon Michael


Clarke, Rt Hon Kenneth (Rushcliffe)
Jackson, Robert (Wantage)



Jenkin, Bernard


Clifton-Brown, Geoffrey
Key, Robert


Cormack, Sir Patrick
King, Rt Hon Tom (Bridgwater)


Cran, James
Kirkbride, Miss Julie


Curry, Rt Hon David
Laing, Mrs Eleanor


Davies, Quentin (Grantham)
Lait, Mrs Jacqui


Davis, Rt Hon David (Haltemprice)
Lansley, Andrew


Day, Stephen
Leigh, Edward


Duncan, Alan
Letwin, Oliver


Duncan Smith, Iain
Lewis, Dr Julian (New Forest E)


Emery, Rt Hon Sir Peter
Lidington, David


Evans, Nigel
Lilley, Rt Hon Peter


Faber, David
Lloyd, Rt Hon Sir Peter (Fareham)


Fabricant, Michael
Loughton, Tim


Fallon, Michael
Luff, Peter






Lyell, Rt Hon Sir Nicholas
Soames, Nicholas


MacGregor, Rt Hon John
Spelman, Mrs Caroline


McIntosh, Miss Anne
Spicer, Sir Michael


MacKay, Andrew
Stanley, Rt Hon Sir John


Maclean, Rt Hon David
Steen, Anthony


McLoughlin, Patrick
Streeter, Gary


Madel, Sir David
Syms, Robert


Malins, Humfrey
Tapsell, Sir Peter


Maples, John
Taylor, Sir Teddy


Mates, Michael
Townend, John


Maude, Rt Hon Francis
Tredinnick, David


Mawhinney, Rt Hon Sir Brian
Trend, Michael


May, Mrs Theresa
Tyrie, Andrew


Moss, Malcolm
Walter, Robert


Nicholls, Patrick
Wardle, Charles


Ottaway, Richard
Waterson, Nigel


Paice, James
Wells, Bowen


Paterson, Owen
Whittingdale, John


Pickles, Eric
Wilkinson, John


Prior, David
Willetts, David


Randall, John
Wilshire, David


Redwood, Rt Hon John
Winterton, Mrs Ann (Congleton)


Robathan, Andrew
Winterton, Nicholas (Macclesfield)


Roe, Mrs Marion (Broxbourne)
Woodward, Shaun


Rowe, Andrew (Faversham)
Yeo, Tim


Ruffley, David
Young, Rt Hon Sir George


St Aubyn, Nick



Sayeed, Jonathan
Tellers for the Ayes:


Shephard, Rt Hon Mrs Gillian
Mr. John M. Taylor and


Simpson, Keith (Mid-Norfolk)
Mr. Tim Collins.


NOES


Abbott, Ms Diane
Campbell, Mrs Anne (C'bridge)


Adams, Mrs Irene (Paisley N)
Campbell, Menzies (NE Fife)


Alexander, Douglas
Campbell, Ronnie (Blyth V)


Allen, Graham
Campbell-Savours, Dale


Anderson, Donald (Swansea E)
Canavan, Dennis


Anderson, Janet (Rossendale)
Cann, Jamie


Armstrong, Ms Hilary
Caplin, Ivor


Ashdown, Rt Hon Paddy
Casale, Roger


Ashton, Joe
Caton, Martin


Atkins, Charlotte
Cawsey, Ian


Baker, Norman
Chapman, Ben (Wirral S)


Ballard, Jackie
Chaytor, David


Banks, Tony
Chidgey, David


Barron, Kevin
Chisholm, Malcolm


Battle, John
Clapham, Michael


Bayley, Hugh
Clark, Rt Hon Dr David (S Shields)


Beard, Nigel
Clark, Paul (Gillingham)


Beckett, Rt Hon Mrs Margaret
Clarke, Charles (Norwich S)


Begg, Miss Anne
Clarke, Rt Hon Tom (Coatbridge)


Beith, Rt Hon A J
Clelland, David


Benn, Rt Hon Tony
Clwyd, Ann


Bennett, Andrew F
Coaker, Vernon


Benton, Joe
Coffey, Ms Ann


Bermingham, Gerald
Coleman, Iain


Best, Harold
Colman, Tony


Betts, Clive
Connarty, Michael


Blears, Ms Hazel
Cook, Frank (Stockton N)


Blunkett, Rt Hon David
Cooper, Yvette


Borrow, David
Corbett, Robin


Bradley, Keith (Withington)
Corbyn, Jeremy


Bradley, Peter (The Wrekin)
Cotter, Brian


Bradshaw, Ben
Cousins, Jim


Brake, Tom
Cox, Tom


Brand, Dr Peter
Cranston, Ross


Brinton, Mrs Helen
Crausby, David


Brown, Rt Hon Nick (Newcastle E)
Cryer, Mrs Ann (Keighley)


Brown, Russell (Dumfries)
Cryer, John (Hornchurch)


Browne, Desmond
Cummings, John


Burden, Richard
Cunningham, Rt Hon Dr John (Copeland)


Burnett, John



Burstow, Paul
Dalyell, Tam


Byers, Stephen
Darling, Rt Hon Alistair


Caborn, Richard
Darvill, Keith


Campbell, Alan (Tynemouth)
Davey, Edward (Kingston)





Davey, Valerie (Bristol W)
Hughes, Ms Beverley (Stretford)


Davidson, Ian
Hughes, Kevin (Doncaster N)


Davies, Rt Hon Denzil (Llanelli)
Hughes, Simon (Southwark N)


Davies, Rt Hon Ron (Caerphilly)
Humble, Mrs Joan


Dean, Mrs Janet
Hurst, Alan


Denham, John
Hutton, John


Dewar, Rt Hon Donald
Iddon, Dr Brian


Dismore, Andrew
Illsley, Eric


Dobbin, Jim
Jackson, Helen (Hillsborough)


Dobson, Rt Hon Frank
Jamieson, David


Donohoe, Brian H
Johnson, Alan (Hull W & Hessle)


Doran, Frank
Johnson, Miss Melanie (Welwyn Hatfield)


Dowd, Jim



Drew, David
Jones, Barry (Alyn & Deeside)


Dunwoody, Mrs Gwyneth
Jones, Mrs Fiona (Newark)


Eagle, Angela (Wallasey)
Jones, Helen (Warrington N)


Edwards, Huw
Jones, Ms Jenny (Wolverh'ton SW)


Efford, Clive



Ellman, Mrs Louise
Jones, Martyn (Clwyd S)


Ennis, Jeff
Jowell, Ms Tessa


Etherington, Bill
Kaufman, Rt Hon Gerald


Fearn, Ronnie
Keen, Alan (Feltham & Heston)


Field, Rt Hon Frank
Keen, Ann (Brentford & Isleworth)


Flynn, Paul
Keetch, Paul


Follett, Barbara
Kemp, Fraser


Foster, Rt Hon Derek
Kennedy, Charles (Ross Skye)


Foster, Don (Bath)
Kennedy, Jane (Wavertree)


Foster, Michael Jabez (Hastings)
Khabra, Piara S


Foster, Michael J (Worcester)
Kilfoyle, Peter


Foulkes, George
King, Andy (Rugby & Kenilworth)


Fyfe, Maria
Kingham, Ms Tess


Galbraith, Sam
Kirkwood, Archy


Gardiner, Barry
Kumar, Dr Ashok


George, Andrew (St Ives)
Ladyman, Dr Stephen


George, Bruce (Walsall S)
Laxton, Bob


Gerrard, Neil
Lepper, David


Gilroy, Mrs Linda
Leslie, Christopher


Godman, Dr Norman A
Levitt, Tom


Godsiff, Roger
Liddell, Mrs Helen


Goggins, Paul
Livingstone, Ken


Gordon, Mrs Eileen
Lloyd, Tony (Manchester C)


Gorrie, Donald
Llwyd, Elfyn


Grant, Bernie
Lock, David


Griffiths, Jane (Reading E)
Love, Andrew


Griffiths, Nigel (Edinburgh S)
McAllion, John


Griffiths, Win (Bridgend)
McAvoy, Thomas


Grocott, Bruce
McCabe, Steve


Grogan, John
McCartney, Ian (Makerfield)


Gunnell, John
Macdonald, Calum


Hain, Peter
McDonnell, John


Hall, Mike (Weaver Vale)
McIsaac, Shona


Hall, Patrick (Bedford)
McLeish, Henry


Hamilton, Fabian (Leeds NE)
Maclennan, Rt Hon Robert


Hancock, Mike
McNulty, Tony


Hanson, David
MacShane, Denis


Harman, Rt Hon Ms Harriet
Mactaggart, Fiona


Harris, Dr Evan
McWilliam, John


Harvey, Nick
Mahon, Mrs Alice


Heal, Mrs Sylvia
Mallaber, Judy


Heath, David (Somerton & Frome)
Mandelson, Peter


Henderson, Doug (Newcastle N)
Marek, Dr John


Henderson, Ivan (Harwich)
Marsden, Gordon (Blackpool S)


Heppell, John
Marsden, Paul (Shrewsbury)


Hesford, Stephen
Marshall, David (Shettleston)


Hewitt, Ms Patricia
Marshall-Andrews, Robert


Hodge, Ms Margaret
Martlew, Eric


Hoey, Kate
Maxton, John


Home Robertson, John
Meacher, Rt Hon Michael


Hood, Jimmy
Merron, Gillian


Hoon, Geoffrey
Michael, Alun


Hope, Phil
Michie, Bill (Shef'ld Heeley)


Hopkins, Kelvin
Michie, Mrs Ray (Argyll & Bute)


Howarth, Alan (Newport E)
Milburn, Alan


Howarth, George (Knowsley N)
Moffatt, Laura


Howells, Dr Kim
Moonie, Dr Lewis


Hoyle, Lindsay
Moore, Michael






Morgan, Ms Julie (Cardiff N)
Smith, Rt Hon Chris (Islington S)


Morgan, Rhodri (Cardiff W)
Smith, John (Glamorgan)


Morley, Elliot
Smith, Llew (Blaenau Gwent)


Morris, Ms Estelle (B'ham Yardley)
Smith, Sir Robert (W Ab'd'ns)


Mudie, George
Snape, Peter


Mullin, Chris
Soley, Clive


Murphy, Denis (Wansbeck)
Spellar, John


Murphy, Paul (Torfaen)
Squire, Ms Rachel


Naysmith, Dr Doug
Starkey, Dr Phyllis


Oaten, Mark
Steinberg, Gerry


O'Brien, Bill (Normanton)
Stevenson, George


O'Brien, Mike (N Warks)
Stewart, David (Inverness E)


O'Hara, Eddie
Stewart, Ian (Eccles)


Olner, Bill
Stinchcombe, Paul


O'Neill, Martin
Stoate, Dr Howard


Öpik, Lembit
Stott, Roger


Organ, Mrs Diana
Strang, Rt Hon Dr Gavin


Osborne, Ms Sandra
Straw, Rt Hon Jack


Pearson, Ian
Stringer, Graham


Pendry, Tom
Stunell, Andrew


Pickthall, Colin
Sutcliffe, Gerry


Pike, Peter L
Taylor, Rt Hon Mrs Ann (Dewsbury)


Pollard, Kerry



Pond, Chris
Taylor, David (NW Leics)


Pope, Greg
Taylor, Rt Hon John D (Strangford)


Pound, Stephen
Taylor, Matthew (Truro)


Powell, Sir Raymond
Temple-Morris, Peter


Prentice, Ms Bridget (Lewisham E)
Thomas, Gareth (Clwyd W)


Prentice, Gordon (Pendle)
Tipping, Paddy


Prosser, Gwyn
Tonge, Dr Jenny


Purchase, Ken
Touhig, Don


Quinn, Lawrie
Truswell, Paul


Radice, Giles
Turner, Dennis (Wolverh'ton SE)


Rammell, Bill
Turner, Dr Desmond (Kemptown)


Rapson, Syd
Turner, Dr George (NW Norfolk)


Raynsford, Nick
Twigg, Derek (Halton)


Reed, Andrew (Loughborough)
Twigg, Stephen (Enfield)


Reid, Dr John (Hamilton N)
Tyler, Paul


Rendel, David
Vis, Dr Rudi


Robertson, Rt Hon George (Hamilton S)
Wallace, James



Ward, Ms Claire


Robinson, Geoffrey (Cov'try NW)
Wareing, Robert N


Roche, Mrs Barbara
Watts, David


Rogers, Allan
Webb, Steve


Rooker, Jeff
Welsh, Andrew


Rooney, Terry
White, Brian


Ross, Ernie (Dundee W)
Whitehead, Dr Alan


Rowlands, Ted
Wicks, Malcolm


Ruane, Chris
Williams, Rt Hon Alan (Swansea W)


Ruddock, Ms Joan



Russell, Bob (Colchester)
Williams, Alan W (E Carmarthen)


Russell, Ms Christine (Chester)
Willis, Phil


Salter, Martin
Wilson, Brian


Sanders, Adrian
Winnick, David


Savidge, Malcolm
Winterton, Ms Rosie (Doncaster C)


Sawford, Phil
Wise, Audrey


Sedgemore, Brian
Woolas, Phil


Sheerman, Barry
Worthington, Tony


Sheldon, Rt Hon Robert
Wray, James


Short, Rt Hon Clare
Wright, Anthony D (Gt Yarmouth)


Simpson, Alan (Nottingham S)
Wyatt, Derek


Singh, Marsha



Skinner, Dennis
Tellers for the Noes:


Smith, Rt Hon Andrew (Oxford E)
Mr. John McFall and


Smith, Angela (Basildon)
Mr. Robert Ainsworth.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House congratulates the Government for their outstanding record in pursuing their efforts to provide opportunities for those who can work and security for those who cannot, to cut expenditure on economic and social failure and to modernise the welfare system.

BUSINESS OF THE HOUSE

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, the Teaching and Higher Education Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Betts.]

Question agreed to.

Mr. Christopher Gill: On a point of order, Madam Speaker. I know that you are sensitive to the rights of Back Benchers and of Parliament. May I draw your attention to the fact that statutory instrument 1998 No. 1673, which is on today's Votes and Proceedings, is not available in the Vote Office? You will agree that that is, to say the least, unfortunate, and an unforgivable omission by the responsible Department. Members of Parliament are entitled to be able to go to the Vote Office to obtain papers listed.

Madam Speaker: The hon. Gentleman is absolutely correct. The instrument was laid on Friday, and "Erskine May" tells me that, when such drafts or instruments are laid, copies should be made available as soon as possible. Perhaps the Government will see to it that the instrument is made available.

Mr. David Heathcoat-Amory: Further to that point of order, Madam Speaker.

Madam Speaker: I have dealt with that point of order.

Mr. Ian Bruce: On a point of order, Madam Speaker. I have for some years been trying to get Departments to answer letters from Members of Parliament within a sensible time. A week ago, I put down a series of questions to all Ministers asking how long it was taking them to reply, what targets had been set, and how often targets were being achieved. Seven days later, I have had answers from several Departments to the effect that they will write to me shortly.
The more complicated matter on which I seek your advice is that several Ministers have referred me to an answer given today by the Chancellor of the Duchy of Lancaster. However, it is 10.20 pm and I have yet to receive that answer. Neither the Chancellor of the Duchy of Lancaster nor his deputy knew that they were supposed to be answering that question. Members of Parliament are being referred to an answer that is not available. Can you help the Minister or me by saying how Ministers should reply to parliamentary questions and letters from Members?

Madam Speaker: I think that there is a further point of order.

The Chancellor of the Duchy of Lancaster (Dr. David Clark): Further to that point of order, Madam Deputy Speaker. The hon. Member for South Dorset (Mr. Bruce) has just brought the matter to my attention. I will look into it, and I will let him have a reply within 24 hours.

Mr. Heathcoat-Amory: rose—

Madam Speaker: Is this a separate point of order to the previous one, on which I gave a ruling?

Mr. Heathcoat-Amory: It is about the statutory instrument, which names a constituent of mine. A point of order has been made by my hon. Friend the Member for Ludlow (Mr. Gill), but it relates to my constituent, and this is the second time that the same thing has happened.

Madam Speaker: The point relates to the Food (Cheese) (Emergency Control) (Amendment No. 2) Order 1998 (SI, 1998, No. 1673).

Mr. Heathcoat-Amory: Yes, and it is my constituent's livelihood that is at stake. In May, when the order was first laid, there was the same failure to notify the House or me. An apology was given by the Minister of State, Department of Health, who said that that failure resulted from the urgency of the matter. That was two months ago.
The Government have had plenty of time to work out whether the matter is urgent. The second order that is laid pursuant to this should be notified to me as the constituency Member of Parliament and to the House. I put it to you, Madam Speaker, that this is not simply a discourtesy, but a contempt of the House. I suggest also that it is a discourtesy to you that this continues to occur despite verbal apologies from the Department concerned.

Madam Speaker: It is hardly contempt of the House. If the right hon. Gentleman claims that it is contempt of the House, I must have that in writing. I hope that I have given something of a reprimand in making the point that, as the statutory instrument was laid on Friday, "Erskine May" tells us that it should be available in the Vote Office. I ask for that to occur before the rising of the House tonight.

Orders of the Day — Teaching and Higher Education Bill [Lords]

Lords amendment considered.

Clause 25

IMPOSITION OF CONDITIONS AS TO FEES AT FURTHER AND HIGHER EDUCATION INSTITUTIONS IN SCOTLAND

The Secretary of State for Education and Employment (Mr. David Blunkett): I beg to move,
That this House disagrees to the Amendment proposed by the Lords in lieu of the words left out of the Bill in page 22, lines 31 to 39.

Madam Speaker: I inform the House that the Lords amendment in lieu of the words so left out of the Bill involves privilege.

Mr. Blunkett: I commend my right hon. Friend the Secretary of State for Scotland and his hon. Friends for the enormous patience that they have shown in recent weeks during the to-ing and fro-ing between this place and the House of Lords. It has been a travesty to see in the newspapers and hear in debates in the other place signs of the failure to understand the Government's proposition in terms of four-year degree courses in Scotland. Intelligent people should understand clearly why we have introduced the measure. They signally fail to understand that we have done so precisely because there are different education and legal systems in Scotland, and then criticise us for taking action that underpins and underlines that distinction. It is frankly breathtaking.
The House listened to the views of the upper House when we returned again and again to this aspect of the Teaching and Higher Education Bill. For that reason, I do not intend to detain the House for long tonight. [HON. MEMBERS: "Shame."] However, I must clearly detain the House long enough in order to explain to those Opposition Members who are shouting, "Shame," why we are carrying through this proposition, and why the motion carried by the House of Lords would create anomalies that would be much worse than those claimed in relation to our proposition.

Mr. Simon Hughes: Will the Secretary of State give way?

Mr. Blunkett: I will when I have made some progress.
If the Scottish education system is different—and we all accept that it is—if four-year courses are the norm because highers last for a year, as opposed to A-levels, which last for two years, and if, therefore, there is a different system that takes account—

Mr. Peter Bottomley: You have lost the House.

Mr. Blunkett: I fear not; the only person that I have lost is the hon. Gentleman.
If there is a programme of four-year degrees in Scotland in order to reflect the situation in terms of highers, if our proposition reflects the need to take account of that difference—which was picked up by Sir Ron Garrick in the report that he produced at the time of the Dearing inquiry—and if Lord Dearing has said, including in speeches in the House of Lords, that his report recommends that the distinction should be recognised and built into law, is it surprising to anyone that the Government should reflect the Garrick inquiry and Lord Dearing's recommendations, and act upon them?
Does it surprise anyone that we took action to ensure that the fourth year in Scotland was seen as different from that in England, Wales or Northern Ireland? I would have thought not, but as Opposition Members are clearly unconvinced, and want to pass something different, I would like to explain why we shall not accept that.

Mr. Simon Hughes: The right hon. Gentleman started his explanation by noting that the university system is Scotland is different from that in the rest of United Kingdom, and in one sense it is. Why were my constituents, 2 per cent. of whom end up each year in Scottish universities, given the same application form to cover Scotland, Wales, England and Northern Ireland? The same Universities and Colleges Admissions Service system processes their applications. If the systems are so different, why has there always been a common system for application to university, allowing students to choose their courses on the basis of their suitability?

Mr. Blunkett: That explains why we are having some difficulty in outlining the difference to Opposition Members. It is not a question of the simplicity of the administration of application, but of the extent, level and timing of tuition. That is the difference between the English, Welsh and Northern Irish and the Scottish systems. We are talking about an historic difference in education systems, and narrowing the differences in respect of the likely expenditure that students will have to incur. That was the difference that the Dearing and Garrick committees wanted to be reflected, and it is the difference that we are reflecting. To do otherwise would create other anomalies.
If someone from Northumberland went to Newcastle with an amendment passed to reflect the fourth year in England, Wales or Northern Ireland, we would create an enormous anomaly. It would result in 60,000 people taking four-year degrees in England, Wales and Northern Ireland complaining that the anomaly affected them rather than a small number of students who go to Scottish universities from England, Wales and Northern Ireland.

Mrs. Angela Browning: If we are to accept the right hon. Gentleman's argument that there should be an anomaly for England, Wales and Northern Ireland, given that we have debated the matter on several occasions and that it is important that the facts are laid before the House, will he take us through, country by country, the anomaly of why the education systems of France, Germany, Italy, Holland, Portugal, Spain,

Belgium and the rest of them make them eligible for a means-tested tuition fee, but not England, Wales and Northern Ireland?

Mr. Blunkett: The hon. Lady misses the point. We are not talking about the education systems of France or Portugal but of Scotland.

Mr. Peter Bottomley: Ask for a better briefing.

Mr. Blunkett: I have a perfectly good briefing. To carry through the recommendations of Dearing and Garrick, because the United Kingdom is part of the European Union, we must reflect on what happens in the home countries in terms of European Union entitlement. It ill becomes the Liberal Democrats, who are great enthusiasts for Europe, to use as a stick to beat us the inevitable outcome that we must acknowledge students from Europe. I want to explain to the House just how big an anomaly it really is.

Mr. A. J. Beith: Will the Secretary of State give way?

Mr. Blunkett: I shall, when I have explained just how many students are affected by what our opponents describe as the European anomaly.
In 1996–97, there were precisely 350 students in their fourth year in Scottish universities from other European nations. Is it worth overturning the European issue, which is exercising Opposition Members and the House of Lords, in order to create a much bigger anomaly, whereby we would inevitably be accused of discriminating in favour of a young person doing a four-year degree course in Scotland, rather than in England, Wales or Northern Ireland?
We cannot afford as a nation to create a new anomaly that would inevitably cost us at least £27 million to take account of four-year degrees in the remaining countries of the United Kingdom. We simply could not do it. Twenty-seven million pounds is a convincing sum in terms of opening up access to students throughout the UK who are currently being encouraged to take up university places.

Mr. Beith: Will the Secretary of State explain to students and potential students in Northumberland why what is perceived as a potential unfairness in relation to students from other European Union member countries is not recognised by the Government as an unfairness in relation to the inhabitants of Northumberland when they find themselves, not in two different universities, but in the same university as students who are paying £1,000 less in tuition fees for the same course—who, in some cases, would be students with whom they had gone to school, and who lived only a few miles from where they lived?

Mr. Blunkett: Because to do otherwise than we propose would result in the anomaly of which the right hon. Gentleman is perfectly aware—that exemption would apply to a student from his constituency who went to Edinburgh or Dundee, but not to a student who went to Newcastle. It is as simple—[Interruption.] It is as simple


as that. I shall repeat—[Interruption.]—I shall repeat it again, because Opposition Members are so intent on shouting out after a good supper that they cannot understand the point: to do other than we propose would result in the right hon. Gentleman's constituents in Northumberland finding themselves able to be exempt from fees if they went north of the border, but not if they went to Newcastle.
That would create an entirely new anomaly affecting all four-year courses in England, Wales and Northern Ireland. If the House believes that that is an anomaly when it affects 350 students from Europe, what about the anomaly affecting 60,000 students from the rest of the United Kingdom? That is what it amounts to.

Mr. David Rendel: Will the Secretary of State give way?

Mr. Blunkett: I shall in a moment.
Precisely because we have had so much difficulty explaining to Members of this House and of the House of Lords why one tiny anomaly relating to European students should not be replaced by a very substantial anomaly relating to all four-year degrees throughout the country, and precisely because we do not appear yet to have managed to get the message across that, in any case, those who are not so well off will already be exempt from, or will have ameliorated, the fourth-year expenditure in Scotland if their income is insufficient to meet it—for those reasons, I want to offer a way forward tonight.

Mr. Rendel: Will the Secretary of State give way now?

Mr. Blunkett: The hon. Gentleman must have been in the House long enough to know that intervening on me at the moment when I am about to say something that might be of interest to him is not the best way of encouraging me to deliver it.
We have said throughout the proceedings on the Bill that we are prepared to monitor the impact of the changes that we are introducing. That is why, to enable Members of this House and the House of Lords to reflect on the alternatives and the anomalies that they would probably create, I offer, with my right hon. Friends the Secretaries of State for Scotland, for Wales and for Northern Ireland, the opportunity to have an independent review early next year to examine how our proposals for the Scottish fourth-year exemption are working. That review would monitor the impact—[Interruption.]

Mr. Deputy Speaker (Mr. Michael Lord): Order. The House must listen to the right hon. Gentleman.

Mr. Blunkett: I am giving hon. Members a little time so that the wine and whisky can quieten them a little.
We propose to offer an independent review to take account of those entering Scottish universities this year and early applications for next year. It could also take account of the views of Opposition parties—if they so wish—the Scottish higher education principals, the Committee of Vice-Chancellors and Principals and others on the alternatives that they consider might be better. That is not rubbish; it is not to be dismissed. It will give the

other place and Opposition parties in this House the chance to state what action they want to be taken and to acknowledge what would be the impact of that action. That review would take place far in advance of any student reaching the fourth year under the new system.

Mr. Peter Bottomley: Will the Secretary of State's acknowledgement that there may be some merit in the opposition to the proposal lead the Government to say that they will not try to reverse the Lords amendments, but accept them unless and until they are convinced that they are right and everybody else is wrong?

Mr. Blunkett: No, I shall not say that, for several important reasons. The most important reason is that, when an unelected House attempts again and again to overturn the declared will of an elected Chamber, it is always the democratic elected Chamber that must succeed in putting through its policies. In the end, whether or not the House of Lords believes that it is right, that its wisdom is greater than ours and that the anomalies that it would create are fewer than the ones that it criticises us for creating, this House must account to the British people.
This House must stand or fall by what it does. This House will, in the end, have to take responsibility for the outcome. That is why this House, on behalf of the democratic constitution of our country and the people who elected us, has to succeed in having its way. That is why we shall overturn the Lords amendment, and, if the Lords send it back to us again, we will overturn it again. That is why this House must always prevail over the unelected House next door.

Mr. David Willetts: I begin by welcoming the Secretary of State, because so far he has not played a conspicuous role in the debate on this matter. We hoped that, as he had deigned to contribute to the discussion of the Scottish anomaly, we might have a prospect of making progress. The Minister for Education and Industry, Scottish Office, has come to the Chamber several times with feeble and unconvincing arguments, and we hoped that the Secretary of State could come up with something better. That hope was further encouraged when we read some briefing—I do not know whose ministerial office it was faxed from—in last week's Financial Times. The journalist wrote:
In a sign the government has been rattled. David Blunkett, the education secretary, will lead a mission 'to explain' in Monday's crucial debate in the House of Commons. He takes over from Brian Wilson, Scottish Office spokesman, who is thought to have underperformed on the so-called 'Scottish anomaly'.
He has under-performed, has he? This issue led to the second biggest rebellion in this Chamber since the election, apart from the single parent vote, and the biggest defeat for the Government in the Lords since 1913, which, come to think of it, was a year after the Titanic under-performed as well.

Mr. Blunkett: I know that we have introduced a numeracy programme, but I should have thought that even the Opposition could count. Only one Labour Member voted against on the previous occasion.

Mr. Willetts: The rebellions, which included 31 Labour Members on one occasion, were against proposals put forward by the Secretary of State under the Bill.
The Secretary of State now steps in and appears to offer a crack of light. We are told that the door is ajar, inasmuch as we shall get a review, but we are not told whether he is willing to accept the fundamental point of principle—whether he understands the anger that is caused by the idea that two students studying side by side, doing the same course at the same university, should pay different tuition fees simply because of where they happen to live within the United Kingdom. That is the point of principle which the Secretary of State has signally failed to address tonight.
The review seems to involve students from England, Wales or Northern Ireland applying for places at Scottish universities without knowing whether they face three or four years' fees. That is not a reasonable basis on which any student should be asked to apply.

Mr. Ian Bruce: Are not the Government trying to pick up on the Dearing report, in which a three-year degree course in England and Wales takes four years in Scotland? If a course takes four years, whether a student comes from England or from Scotland, he or she still has to do four years, but the Government feel that they should pay only three years' tuition fees. Why are the Government so against following the logic of their own principles in this matter?

Mr. Willetts: I entirely agree with my hon. Friend. What I find extraordinary is that the Secretary of State is now trying to defend a position that he did not advocate when he made his original statement on the matter to the House last July. I do not believe that he intended that there should be a Scottish anomaly when he first announced his alternative approach, on the very day of the Dearing report's publication. I think that this mess is caused entirely by the Minister for Education and Industry, Scottish Office announcing a concession in October without clearing it with his colleagues in the Department for Education and Employment. The only explanation for the Government's obduracy is a row going on between that Department and the Scottish Office.

The Minister for Education and Industry, Scottish Office (Mr. Brian Wilson): Whether under-performing or over-performing, I was certainly performing well enough to see the hon. Gentleman off on the last occasion. Does he think that, when Lord Dearing and his committee made precisely the recommendation that we have acted on, they intended to create an anomaly or resolve one?

Mr. Willetts: All that I can say is that I am still leading for the Opposition on this subject, whereas the Minister is no longer leading for the Government, so it is pretty clear to me who has been under-performing.
The Dearing report is absolutely clear that
this would be a matter for consideration by the Secretary of State for Scotland".
That is what Sir Ron Dearing said, and that is why we are inviting the Government to consider the matter again.
The only argument that we heard tonight was the claim that the anomaly would cost not —2 million, but —27 million. In other words, we were told that, instead of simply having to ensure equal treatment among students from England or Scotland at the same Scottish university, the Government would have to get rid of fourth-year

tuition fees for every university in the United Kingdom. That is no part of our policy. I do not believe that that was the intention of any of the very many peers from all parts of the other place who voted against the Government. The argument is a complete red herring, because the two systems are indeed different. There is no reason why a regime that should apply to a Scottish university should also apply to an English university.

Ms Margaret Hodge: Is the hon. Gentleman seriously asking the House to accept that a constituent of mine from Barking could attend a Scottish university and pay only three years of fees—not the fourth—whereas the same constituent, reading the same subject at an English university, would be expected to pay fees for the fourth year? Is he not, by his policy, creating a new set of anomalies?

Mr. Willetts: All I can say is that they are different education systems. [HON. MEMBERS: "Oh."] They are different education systems.

Mr. Blunkett: Is it not precisely the fact that Scottish students go through the Scottish education system and students in Barking do not that makes the difference between what the hon. Gentleman proposes and what we propose?

Mr. Willetts: No; that is not the case. That approach—the claim that the first year of the Scottish four-year university course exists only to allow students to catch up with English A-levels—produces great anger and irritation in people in the Scottish educational world. That is not the case, but what is? I quote the secretary of the Committee of Scottish Higher Education Principals, Ronald Crawford:
The £27 million is a distraction. The four-year degree
course
is the norm in Scotland and it's the exception in the rest of the United Kingdom. It's inappropriate to consider the two analogously".
There is absolutely no need, therefore, for the principle of equal treatment of students at the same Scottish university to require that one also abandons fourth-year tuition fees at all English, Welsh and Northern Irish universities. That is why the concession would cost only £2 million.
The Secretary of State failed to explain on what basis he moved from contemplating having to concede on the Scottish anomaly to saying that he would have to make the wider concession in England, Wales and Northern Ireland. Is he saying that it would be a legal requirement on him, as we were told at one point? We were told that, as soon as the matter went before the courts, he would be obliged to abandon fourth-year tuition fees in England, Wales and Northern Ireland. Is he saying that? If so, I must tell him that the courts would be familiar with the different higher education system in Scotland; they would understand perfectly that one was entitled to have a different regime in Scotland from that in England.
If the Secretary of State is not saying that it is a legal requirement, is he saying that it would have to be done as a matter of policy? The present Government are supposed to believe in devolution. They are the Government who are supposed to believe in allowing things to be different


in Scotland from in England, Wales and Northern Ireland. I do not see why any Minister should feel obliged to take a policy decision to enforce uniformity in that one small area of higher education when, throughout the rest of education and higher education in Scotland and England, the situation is different.

Mr. Simon Hughes: Does the hon. Gentleman agree that the argument that, above all, puts an end to that used by the hon. Member for Barking (Ms Hodge) is the fact that the Government have never argued that her former students in Islington, when they were secondary school pupils, could not go out of Islington, as many pupils did, to another education system, paid for by the taxpayer? That is exactly the same parallel in secondary education as in higher education, where people may choose where to go to advance their studies. The hon. Lady never previously argued that Islington 15-year-olds could go to school only in Islington.

Mr. Willetts: That is a very useful point, whatever it might mean.
I shall revert to the argument that I was developing. If the Secretary of State claims that he is on a slippery slope and that he cannot make a concession for a footling £2 million without being obliged to make a concession for £27 million, he should explain to the House where that requirement comes from. Is it a legal requirement? Is it a policy decision? Or is it a political judgment about the forces that he would face? Is he saying that the political campaigns around the country would be so powerful that he, a poor weakling of a politician, would immediately have to give way and abandon fourth-year tuition fees in England, Wales and Northern Ireland?
I do not find that credible. I have a higher opinion of the Secretary of State than to believe that he would immediately give way on the £27 million. The argument that he is trying to use with the House of Lords is that he is such a tough guy and such a macho Secretary of State that he is willing to jeopardise his entire Bill, rather than pay £2 million to deal with a glaring, absurd anomaly facing students going to Scottish universities.
The only way in which the House could accept the argument advanced by the Secretary of State tonight is to believe two contradictory propositions—first, that the political pressures for an entirely different higher education system in England immediately to abandon fourth-year tuition fees would be so irresistible that the Secretary of State would give way, and secondly, that the Secretary of State is so tough and macho that he is willing to sacrifice his entire Bill, rather than make a £2 million concession.
I am prepared to believe one proposition or the other, but not both. The only way that the Secretary of State can win the argument tonight in the House is by maintaining that both are true.

Mr. James Wallace: The hon. Gentleman referred to the anomalies which it is incumbent on the Secretary of State to resolve. Does he agree that, as the Secretary of State intends to set up an independent review, the best way of ensuring certainty would be to assure those entering Scottish universities this

year that they would not have to pay fees in the fourth year, and that the review should be on the anomaly that the Secretary of State considers important and the extent to which it matters in the longer term?

Mr. Willetts: If the Government accepted that there should not be anomalous treatment of students attending Scottish universities, and undertook to review the evidence, having protected the status quo, that would be a different matter. Sadly, that was not the point that the Secretary of State made this evening.
We have heard much in the past few days about the Secretary of State's other responsibility. We have already heard some of the briefing about the statement that we shall hear from the Chancellor tomorrow. We may find that the Secretary of State himself comes to the House to tell us about the enormous sums that he claims are to be put into education in the next few years. We have read in the press about £15 billion of higher education expenditure over the next few years.
Will not the Secretary of State look a rather absurd figure if he pops up on our television screens explaining that he has secured billions of pounds of extra cash from the Chancellor of the Exchequer, yet it is impossible to spend £2 million to deal with an anomaly that makes no sense to anyone outside the whipped ranks of his own party?

Dr. George Turner: rose—

Mr. Willetts: No, I am about to finish.
If the Secretary of State is to be taken seriously when he speaks about the financial settlement that he is bringing to the House in the next few days, he cannot also maintain that £2 million to deal with such an anomaly is a concession that it is impossible for him to make.

Mr. Tam Dalyell: A lot of this is about perception. Many students at Scottish universities come from the north of Ireland, so how is it to be justified that a student from Belfast will pay £1,000 more than a student from Dublin? That raises the issue of the cement of the British universities system. Part of the cement that keeps the United Kingdom together is the universities, and anything that damages the Scottish universities as United Kingdom universities is a serious matter.
In the previous debate, I asked specific questions about the legal situation. I am entitled to say that the view of Edinburgh university, which comes through Sir Stewart Sutherland, the vice-chancellor, after the taking of legal advice, is that it is more than likely that the Government's view would not be sustained in a test case. I have also consulted Professor Anthony Bradley, a practising Queen's counsel, former editor of the Journal of Public Law and recently retired professor of constitutional law at the university of Edinburgh. This is what he put into print in the Edinburgh Evening News on Thursday 9 July:
The Government's controversial plan for students' tuition fees could be destroyed by its commitment to European human rights".
That is the view of a QC. Although this is not the time to occupy the House with the detailed legal argument that some of us have heard, I must ask my right hon. Friend the Secretary of State two specific questions about the


review. I welcome the offer of a review and think that it will be helpful and constructive, but will he undertake that nothing will be done to charge existing students until, first, the review has reported and, secondly, there has been a test case in the courts to determine whether Professor Bradley and the university of Edinburgh, backed by Professor Ian Graham-Bryce of the university of Dundee, are correct? If he could give those undertakings, he would greatly assist some of us.

Mr. Andrew Welsh: Now we have it: after all the to-ing and fro-ing, and after all the kerfuffle outside this place, all that we are being offered is an independent review of a situation that should have been resolved by any Government who were semi-competent. Will the Minister explain how independent the review will be, who will be on the review body, and how will it prevent uncertainty among the student population? From what I have heard, all this is simply a ploy based not on any principle, but on ducking and weaving by a Government who have been trapped by their inability to sort out discrimination that they have created.
This is a point of principle. Tuition fees are wrong and, along with student loans, they will restrict access to higher education. The Government are completely out of step with university principals, students, the Association of University Teachers and others involved in education. The Scottish National party has opposed all attempts to erode the principle of education for all, according to ability and regardless of financial circumstances. Tuition fees are, like student loans, a backward step. As the Government insist on those fees, we can only seek to ensure that the arrangements are as fair as possible.

Mr. Wilson: Will the hon. Gentleman confirm that his party's commitment to use the Scottish Parliament to remove student tuition fees and student loans has been wiped from the internet, along with the rest of his party's previous policies?

Mr. Welsh: The Minister has forgotten all points of principle. His Government should have allowed the Scottish Parliament to take this decision. In respect of the Scottish Parliament, we will get rid of this discriminatory anomaly affecting English, Welsh and Northern Irish students. We shall maintain our moral commitment, unlike the Government.
The amount involved is only £2 million. It is a disgrace if the three Departments cannot find £2 million from their budgets. The Scottish National party will, on a point of principle, ensure that we get rid of this discrimination against English, Welsh and Northern Irish students.

Miss Anne Begg: Can I be absolutely sure that the hon. Gentleman is committing the Scottish National party to spending Scottish taxpayers' money to fund English students coming to Scottish universities. [Interruption.]

Mr. Welsh: Who is the nationalist now, I wonder.

11 pm

Mr. Gerald Bermingham: On a point of order, Mr. Deputy Speaker. Will you ask hon. Members to apologise? We do not use the word "racist" in the House.

Mr. Deputy Speaker: I did not hear that word being used.

Mr. Welsh: The question of the hon. Member for Aberdeen, South (Miss Begg) should be directed to the Government, who have introduced this measure that discriminates against English, Welsh and Northern Irish students. The Scottish National party will ensure that such discrimination does not exist.
I refer the hon. Lady to a debate on this issue that I secured last January. We made our views clear that we are against such discrimination. The Home Departments in Wales, Northern Ireland and England should pick up the tab. The Government are annoyed at the House of Lords' refusal to back down. The Secretary of State for Education and Employment is becoming increasingly alarmed that his whole Bill will collapse. My party believes that it would be no bad thing if it did collapse, because we think that all matters relating to higher education in Scotland should be within the remit of the Scottish Parliament. It will not be long before the Scottish Parliament is in power and taking these decisions. It should be left to that Parliament to decide, in a Scottish context, what the Scottish people want to happen in our universities.
If the Government are determined that the Teaching and Higher Education Bill should become law, all they need to do is to accept the amendment and they would have the approval of those involved in education, and of the general public.
In January, I led an Adjournment debate on this issue. I raised objections to the Government's policy, not just because it is discriminatory, but because of the effects that it will have on Scottish universities and on the Scottish economy. I was accused of scaremongering, yet my fears are shared by many involved in education in Scotland.
The principal of Dundee university said at this year's graduation ceremony last Thursday:
It is the end of an era for higher education.…I cannot disguise my feelings of profound concern. Notwithstanding what you may read in the press, our application figures leave little doubt that the issue of student fees is having an adverse effect, particularly the differential between Scottish domiciled students and those from England, Wales and Northern Ireland.
Even before the review, the Government have been told what is going on. The principal went on:
Whatever rationalisations are put forward, the practical impact is discriminatory. If this leads to a decrease in the diversity of the student body…then it will be Scottish higher education and ultimately Scottish interests which will be the losers.
The Government do not need a review to find out what educationists of Scotland are telling them now.
In an independent Scotland, the Scottish National party plans to abolish tuition fees. If the Government fail to listen to public opinion and to solve this anomaly, a SNP-led Scottish Parliament, even at a reduced devolutionary level, will find the £2 million required to ensure equity for all students who choose to study in


Scotland. That compares well with the Government's prevarication by offering a review rather than solving the problem.

Mr. John Home Robertson: My information is that 31 per cent. of the students from England who will be eligible to pay these fees will come from English public schools. As a former pupil of an English public school, I find it odd that the Scottish National party proposes to raise Scottish taxpayers' money to subsidise people from English public schools.

Mr. Welsh: The hon. Gentleman has been in the Labour party for too long. He has forgotten what principle means. If he is willing to sell his political soul to new Labour, good luck to him, but others have different views.
Let me point out to the hon. Gentleman that, by that reckoning, 70 per cent. do not come from English public schools. We would sort the anomaly out, but his question should be directed at the person who—

Mr. Home Robertson: rose—

Mr. Welsh: Will the hon. Gentleman sit down? We have heard enough from him.

Mr. Wilson: rose—

Mr. Welsh: The hon. Gentleman's question should be directed at the hon. Member who is now trying to intervene, and who failed to convince his English, Welsh and Northern Ireland colleagues of the need to sort out the discrimination. The hon. Gentleman should direct his ire at his own Front Benchers, who could solve the problem very quickly and at very little cost.

Mr. Wilson: I think that—doubtless inadvertently—the hon. Gentleman misunderstood the point made by my hon. Friend the Member for East Lothian (Mr. Home Robertson). At least a third of students coming from England, Northern Ireland or Wales to Scotland will pay no tuition fees. My hon. Friend's point was that, as a third of students coming from England to Scottish universities come from the private sector—and are welcome to do so—inevitably the vast majority of those who would benefit from the waiving of fees would be people who had paid for a private-school education in England. The hon. Gentleman intends to give them—

Mr. Deputy Speaker: Order. The intervention is far too long.

Mr. Welsh: I wanted the Minister to explain his hon. Friend's question, because I am a bit fed up with the Minister fiddling statistics and trying to make a case when none exists. He stated categorically that 40 per cent. of students would not pay tuition fees, but that is not necessarily the case. If the worst comes to the worst, and people from low-income households are deterred from coming to university—as we fear—the figure will not be 40 per cent.; it could be 30 per cent., 20 per cent. or lower. The Minister has used statistical methods and debating tricks to hide a policy that is fundamentally flawed and basically immoral.
I was going to say that the Government must tonight listen to the views expressed, not only in another place, but by hon. Members on both sides of the House—those who have not have been gagged on the Minister's side, that is. They must also listen to the voices of students and those working in education. The Government's policy is opposed by Scottish Ancients, the Association of University Teachers, the National Union of Students and the Committee of Vice-Chancellors and Principals of the Universities of the United Kingdom—but, of course, this Labour Government think that they know better. If they are so confident of the wisdom of what they are doing, why do they not allow a free vote?
The fact is that, yet again, the House of Lords has given the Government a chance to get out of the corner into which they have painted themselves. They are totally out of step with educational and public opinion on the subject, and they will pay a price for that. It will be unfortunate for everyone if the Scottish education system also pays a price for their incompetence.

Mr. Dennis Canavan: I welcome the Secretary of State's announcement of an independent review as a step in the right direction and a recognition by the Government that, on this important issue, they may be wrong; but I ask my right hon. Friend the Secretary of State, or whoever will wind up the debate, to give us assurances along the lines requested by my hon. Friend the Member for Linlithgow (Mr. Dalyell). The Government's announcement seems to be a last-minute concession: I certainly knew nothing about it before the debate, and I think that it has taken many of us by surprise. I feel that we are entitled to know more about the details of the membership of the body conducting the review, and about its remit and time scale. Nevertheless, I welcome the fact that the Government have acted, and the fact that the debate was opened by my right hon. Friend the Secretary of State.
During the previous debate, I remarked to my hon. Friend the Minister for Education and Industry at the Scottish Office that he had perhaps drawn the short straw in coming to the Dispatch Box and trying to defend the indefensible. Of course this matter is of great relevance to the Scottish Office, which has some responsibility for Scottish universities and Scottish higher education in general, but, because it affects students attending Scottish universities from England, Wales and Northern Ireland, greater interest should be—and should have been from the outset—shown in this matter by the Secretary of State for Education and Employment and, indeed, by the Secretaries of State for Wales and for Northern Ireland.
I do not want to go over the same old ground that we have gone over in previous debates, but I should like to comment on some of the points that have been put forward by the Government, both in the House and in some of their press statements. We are told that better-off students would be the main beneficiaries of the fee waiver. If that is true, it would also be true in the case of the Scottish Office's original decision regarding a fee waiver for students from Scotland and other European Union countries.
I suppose that there are some well-off students from England who attend Scottish universities, but there are some well off students from Scotland and indeed from France, Germany and Italy who attend Scottish universities. The latter will nevertheless benefit from the


fee waiver, whereas their English counterparts with the same parental income will not. That is where the injustice comes in.
Besides, it is nonsense to suggest that students from England, Wales and Northern Ireland who go to Scottish universities generally come from very high-income families. The Government's own figures refute that, because we are talking about 3,500 people a year and, if they all came from very high-income families, obviously, they would all pay the full fees of £1,000 and the total cost of the amendment would be £3.5 million, but the Government have at last admitted that the total cost of the amendment would be only £2 million. Therefore, the average fee paid by the 3,500 students from England, Wales and Northern Ireland works out at about £570 and the corresponding average residual parental income is £22,750 per annum, which is not exactly filthy rich.
During the previous debate, the Minister for Education and Industry said—this has caused a bit of controversy in Scotland:
The pecking order of schools supplying students from England to Edinburgh and St. Andrews universities is: No. 1, Eton college; No. 2, Wellington college; No. 3, Charterhouse; and, No. 4, Westminster school. That tells us something about the wonderful, egalitarian education system that we have in Scotland."—[Official Report, 1 July 1998; Vol. 315, c. 442.]
What he did not tell us was that he was referring to a grand total of 256 students, out of a total of 8,400 students, from England attending Edinburgh or St. Andrews universities, which are not typical Scottish universities. Nevertheless, we are talking about a sample—and not exactly a random sample—of 256 students out of a total of 8,400.

Mr. Ian Bruce: I wonder whether the hon. Gentleman has done any more research. I believe that most of those 256 probably come from Scottish families and go to English public schools, and will get the concession because their parents live in Scotland.

Mr. Canavan: That may be the case. The statement that those 256 are absolutely domiciled in England may be inaccurate.
The broader picture—of students from England accepted to all Scottish universities last year—shows that the breakdown is far more egalitarian than was suggested by my hon. Friend the Minister for Education and Industry, Scottish Office. Of those students, 33 per cent. came from state schools, including 26 per cent. from comprehensives; 21 per cent. came from further education, many—probably most—of whom would have come indirectly from state schools; 1 per cent. from higher education; 13 per cent. from other or unknown sources; and 32 per cent. from independent schools. It is therefore nonsense to claim that the majority of English entrants to Scottish universities are from English public schools.

Mr. Phil Willis: Does the hon. Gentleman agree that one of the principal issues that is being missed in the debate is that the Scottish higher education system needs students from all walks of life and from all countries to provide the diversity and specialness that make Scottish universities so vibrant

and positive? Does he agree that the Government's proposals will drive away the very students who give the Scottish education system its very special flavour?

Mr. Canavan: Scottish universities—possibly more than many of their English counterparts—have always had an international outlook. It would be a tragedy if they became narrow-minded nationalist institutions rather than international institutions.
The trend to which the hon. Member for Harrogate and Knaresborough (Mr. Willis) referred has already started. This year, compared with last year, applications from England are down 4.1 per cent., and applications from Northern Ireland are down 5.5 per cent. If the trend continues, it will pose a threat to the viability of many four-year honours courses and to the Scottish tradition of a broad-based university education following on from a broad-based school education.
The other point that I should like to mention was repeated in this debate by the Secretary of State—the Government's claim that acceptance of the Lords amendment would create a new anomaly, as students doing a four-year course in England, Wales or Northern Ireland would not qualify for a fee waiver for their final year. I am sorry that my hon. Friend the Member for Barking (Ms Hodge) —who intervened earlier in the debate—is not in the Chamber now, as I seem to recall that there was a vote to eradicate that specific anomaly, and that she, most of my hon. Friends and every Minister voted against eradicating it. I should welcome any proposal to extend the fee waiver to such students. However, the Government rejected such a proposal because of its cost, reckoning that £27 million would be too expensive.
There is also a uniqueness about the Scottish anomaly. Under the Government's proposals, a student at a Scottish university may have to pay £1,000 more than a student in the same class doing the same course at the same university and with the same parental income, simply because he or she comes from a different part of the United Kingdom. That situation will arise not at any university or college in England, Wales or Northern Ireland but only in Scotland. It would cost only £2 million to eradicate that unique and unfair anomaly.
The Government have probably already incurred a six-figure sum in debating the matter continually here and in another place. If the measure is challenged in the courts, as it is likely to be, they will face paying a bigger sum out of public expenditure in legal fees. I am pleased that, at this eleventh hour, the Government are prepared to think again.
Finally, I have one comment on my right hon. Friend's rant about the House of Lords, that we also heard during the previous debate on the matter. It would be a sad day for British democracy if even the reactionary, unelected House of Lords were seen to take a more enlightened view than a Labour Government—especially a Labour Government who were elected on the mantra and the priorities of education, education, education.

Mr. Don Foster: I am absolutely delighted to follow the hon. Member for Falkirk, West (Mr. Canavan) who conducted a forensic examination of the Government's position. He effectively pointed out that the Government have not been consistent on the issue. If my


hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) catches your eye, Mr. Deputy Speaker, he will pick up that point.
The House well knows that the Liberal Democrats are opposed to the main plank of the Bill—the introduction of tuition fees—and we voted against it on Third Reading. We have argued consistently that the Bill was hastily prepared without any real attention to detail, as the fiasco over gap year students clearly demonstrated.
We are discussing another example of the effects of legislation that has been prepared too hastily—the Scottish anomaly. Already we have heard from the hon. Members for Havant (Mr. Willetts), for Angus (Mr. Welsh) and for Falkirk, West—and the hon. Member for Linlithgow (Mr. Dalyell) certainly implied it—that the Government have now created a ludicrous, incoherent and unjust position. Surely it cannot be acceptable to right hon. and hon. Members that students from England, Wales and Northern Ireland should pay more than students from Scotland for the same course at the same university. That is the anomaly that we are debating.
Sadly, the hon. Member for Barking (Ms Hodge) simply fails to understand the difference between that anomaly and the fact that students from the same area may choose to go to different universities in different locations, study different courses and possibly pay different fees. That is not an anomaly of the same order.
Equally, it cannot be right that students from England, Wales and Northern Ireland should pay more than students from all other European Union countries. Why should a student from Cumbria in England pay more than a student from Umbria in Italy? Why should a student from Manchester pay more than a student from Madrid? The Secretary of State should be aware that many others agree that that is ludicrous.
Lord Shore of Stepney, a former Labour Cabinet Minister described the position as
folly beyond all belief. It is not just discrimination; it is reverse discrimination.
Another Labour peer, Lord Stoddart, remarked in the same debate:
Ordinary working folk, the people in factories and offices, will not understand why English, Welsh and Northern Ireland students have to pay £4,000 for a course in Scotland, while Italians, Southern Irish and Scots have to pay only £3,000. They will laugh their sides off. They will ask 'What sort of people can do this? Who is advising them? Why do they take the advice they are receiving if that sort of nonsense is being handed out to them?"' —[Official Report, House of Lords, 7 July 1998; Vol. 591, c. 1103–05.]
No wonder Lord Stoddart went on to describe the Government's position as nonsense and an absurdity.

Dr. George Turner: rose—

Mr. Foster: I happily give way to the hon. Gentleman.

Dr. Turner: Will the hon. Gentleman deal with what I think is an important point on whether there is an issue worthy of debate? Lord Dearing was appointed by the Conservative Government to head the commission whose recommendations this Government are applying. Will the

hon. Gentleman explain why Lord Dearing still supports his commission's recommendation if, as the hon. Member says, there is no academic or reasonable argument for it?

Mr. Foster: It is a great pity to hear the hon. Gentleman make the same mistake as the Prime Minister has been making day after day at the Dispatch Box. His argument would be infinitely more credible if the Government had accepted the Dearing recommendations, but they have not.
There is no question but that the Government's position is nonsense and an absurdity. One would have thought that they would be grateful to my right hon. Friend Lord Steel, who tabled in another place an amendment that did not seek to wreck the Bill, or even to tear down the arrangements for tuition fees, much as we would like to; it merely sought to get the Government off the hook—to allow them to avoid any further embarrassment—by ending the Scottish anomaly.
I hope that the Secretary of State has carefully examined the vote in another place, as the amendment made clear the feeling about this issue—it commanded an almost unprecedented majority of 211. The majority was so large that, if all Conservative peers had abstained, the amendment would still have won the day. It was so large that, if all hereditary peers had stayed at home, the amendment would still have been agreed to. The amendment's supporters included a former Master of the Rolls, a former Chief Justice of Northern Ireland, a former vice-chancellor of London university, the president of the British Academy, three bishops, a former Clerk of the Parliaments and a former Speaker of the House of Commons. Those people are not negligible; when they and so many others are joined by senior Labour peers, their voices surely cannot be ignored.
The Government rightly want to reform the House of Lords, and we support them in that. Like us, however, they still want a second, revising chamber. The House of Commons must accept that, from time to time, the revising chamber will want to revise, which is what legitimately happened on this occasion in another place. An unacceptable anomaly was identified, and a proposal to rectify it was agreed.
The Government's reaction was remarkable. On 8 July, Glasgow's The Herald said:
Senior Government sources last night made clear their determination to ensure the heavily-criticised plan does eventually become law. 'We are taking the Drumcree line on this; no surrender to the peers. We are toughing it out,' said one source.
[Interruption.] The Secretary of State may ask, "Who said that?" He should check with The Herald, from which it is a direct quotation.
Toughing it out will perpetuate the ludicrous anomaly that is perhaps most starkly illustrated in today's Daily Telegraph. The article tells us that Tom Laycock from Lamberton, 100 yards north of the Scottish border, will pay £1,000 less than Tom Maxwell, from Berwick-upon-Tweed, two miles south of the border, when they both attend an English, film and media course at Stirling university this year.
Last week, the Prime Minister made clear his determination to tough it out. He seems to have misunderstood even the Government's position. He frequently tells us that the Bill reflects the Dearing


proposals, when it does not, and at Prime Minister's Questions last Wednesday he got it wrong again. He initially implied that the cost of Lord Steel's amendment would be £27 million. Even had free tuition to all students in their fourth year been proposed in the amendment, which it was not, the figure would have been wrong: definitive calculations by the Committee of Vice-Chancellors and Principals over the weekend show that even then the figure be only £18 million. In fact, the amendment, which would remedy the incoherent and unjust position, would cost only £2 million.
11.30 pm
The approach of some of the Secretary of State's colleagues can only be described as pig-headed, so perhaps we should applaud his attempt to find a compromise. At least he has shown some signs of realising the hopelessness of the Government's position and appears to be willing to try to build a consensus; but he has not gone nearly far enough to elicit my support or that of my party.
We have become somewhat immune to the offer of a review. After only 14 months of this Government, we are approaching 150 reviews and task forces: that is 10 reviews a month. It is as if the Secretary of State is saying, "Ah, yes. I might be beginning to understand, and perhaps you're right, but I'm not prepared to change my position, so I'll stick to it, but if it causes a problem, I'll review the situation."
We believe that the anomaly will create problems. More importantly, the so-called Scottish anomaly is unjust. In the face of injustice and inequality, we will seek every means at our disposal to persuade the Secretary of State to do what anyone should do if he finds that he is wrong: change his mind. He has shown some willingness to consider that he might be wrong. I hope that he will go further. We are prepared to enter discussions with him to help him to dig himself out of the hole that, frankly, others have dug for him. Better still, he could resolve the matter here and now for £2 million by simply accepting the Lords amendment.

Valerie Davey: People outside cannot understand the preoccupation of the House with a minority of higher education students from the most well-off families. When people ask me what is going on, when the House of Lords has for the third time brought back this detail of the Bill, and I talk to them about higher education, they begin to understand. Let me try to explain to the House, as I have to those people.
As a country, we say to students that it will take them, on average, five years to get a first degree. In England, Wales and Northern Ireland, for the most part, two years are spent at school and three at university. In Scotland, for the most part, one year is spent at school and three at university. [HON. MEMBERS: "Not true."] Fine. That is exactly what I have been learning: more students now stay on for two years at school and then have three at university. The Bill's generosity towards Scotland should therefore be accepted and understood. We are saying that there are five years in which to gain a degree. That argument has been accepted for all students. The special situation in Scotland of having four-year degrees is being recognised and funded.

Mr. John Hayes: Will the hon. Lady give way?

Valerie Davey: No, it is my turn.
The Bill is fairer to more students than any of the amendments put forward in the other place.

Mr. John MacGregor: I do not want to comment on the remarks of the hon. Member for Bristol, West (Valerie Davey) because I do not believe that she knows what she is talking about.
I speak not as a former Secretary of State for Education, but as someone born, brought up and educated in Scotland. I did a four-year university degree course in Scotland as well, incidentally, as a degree course in England.
I want to address the two arguments put forward by the Secretary of State. I have followed all the arguments about Cumbria and Umbria, and so on. Relevant though they are, I do not want to comment on them. I certainly will not follow the prejudice shown by the Minister of State in previous debates and again tonight. He should be ashamed to resort to arguments about students from English independent schools, which is base, old Labour prejudice.
The Secretary of State rested his case on two arguments. The first is that the Scottish education system is different. Because students do highers, they tend to spend less time in school, and need longer at university. That argument does not wash. Some students from Scotland—I was one—do A-levels before entering the Scottish higher education system.
In addition, as my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) said, the Secretary of State cannot argue that his policy on Scottish tuition fees rests on the nature of Scottish education when he is allowing students from all other European Union countries, which have completely different educational systems, to benefit from free tuition. He cannot dismiss that argument by saying that it affects only 350 students. It is an argument of principle, not of numbers.
The Government have not implemented the Dearing report, which, as my hon. Friend the Member for Havant (Mr. Willetts) pointed out, left the matter to the Secretary of State for Scotland. They have instead decided to follow their own route because the four-year honours degree is the norm in Scotland, but does not apply elsewhere. The Secretary of State's first argument fails on that ground.
The right hon. Gentleman's second argument was that, if students from England, Wales and Northern Ireland who went to Scotland were to be allowed free tuition in the fourth year, the same would have to apply to four-year courses in England, Wales and Northern Ireland. Again, that argument does not wash. It is totally bogus. The point is that we want to treat all students at the same university equally, wherever they come from within the European Union. The hon. Member for Linlithgow (Mr. Dalyell) was right to say that the ability of students from the United Kingdom to go to whatever university they want is part of the cement of our universal university education system.
If students from Scotland decide to do a four-year degree course at an English university, they must accept that they will not get a year's free tuition, because that


will not apply to anyone from England. All we argue is that students from anywhere in the EU who go to a Scottish university should be treated the same as students from Scotland. Equally, the answer to the point made by the hon. Member for Barking (Ms Hodge)—she is not here—is that everyone who goes to an English university, whether from Scotland or anywhere else, knows that the fourth year of tuition will not be free. That is the simple point. Therefore, the £2 million argument is correct and the £27 million is a complete red herring. That is why the Secretary of State was wrong in his arguments tonight.

Mr. Willis: Like everyone else who has mentioned her, I am also sorry that the hon. Member for Barking (Ms Hodge) is not in her place.
The Bill has been a disaster for the Government from the very beginning, and the Scottish question has gone from bad to worse. Every time that the issue has ping-ponged like Wimbledon in ermine between this and the other place, the Government's justifications of their position have become more bizarre. If it were such an important issue, the Secretary of State would have mentioned it on 25 June 1997 when he responded to the Dearing inquiry. However, he did not consider the consequences for Scottish four-year degrees at that time.
Fortunately, the Minister for Education and Industry, Scottish Office, was on hand to help out the Secretary of State. The Minister announced that there would be a concession for Scottish students who were domiciled in Scotland and that their fourth-year fees would be paid. It was then pointed out that that was not good enough because the concession fell foul of European law and the fees of all European students would have to be paid. So that concession was made.
We then had the marvellous situation on a Radio 4 programme when the Minister justified the fact that French students at Scottish universities would have their fees paid, by saying that they were part of the European Union—of course, the fees of students from England, Northern Ireland or Wales would not be paid because they were part of the European Union. Since then, the Minister has proved singularly unable to persuade his colleagues in the Department for Education and Employment to fund those students from England, Wales and Northern Ireland who attend Scottish universities. Ultimately, the debate is about one Minister going off on his own. Ever since then, the Government have made a concerted effort to cover their tracks and not give ground. Even on this very small point, the Government are not prepared to give way, irrespective of the arguments.
Lord Sewel—who has done a remarkable job attempting to defend the Government's position in another place—explained that, because there was a difference between the two systems, the rules had to be different. He then admitted that there would be a small anomaly and added that, as students would be paying more for their maintenance, an extra £1,000 did not matter. That became the basis of the Government's argument. When that did not work, an attack was launched on the Scottish university system. There was a concerted effort to

persuade us that it was far better for students from England, Wales and Northern Ireland to enter university at year two because they were well equipped to do so.

Mr. Hayes: Am I right in remembering—perhaps the hon. Gentleman can correct me—that the Minister described that Scottish tradition as bogus, thereby insulting Scottish universities and causing real distress among vice-chancellors, students and all those who believe that it is a decent and proper Scottish tradition?

Mr. Willis: I do not know whether I am grateful for that intervention.[HON. MEMBERS: "You are."] I am told that I am—but one cannot toady to the Tories. It was not a member of the other place, but the Minister who made that disgraceful statement to which I shall return later.
When the Bill was on Report in the House of Lords, the arguments changed again. Then it was not because the university systems were different, but because there was a difference in intellectual attainment between students in Scotland and England. We then went on to the hidden agenda when the Minister in the Lords said that Scottish universities wanted English students because they wanted extra cash.
The hon. Member for South Holland and The Deepings (Mr. Hayes) was right to say that the Minister for Education and Industry argued that the Scottish four-year degree system was bogus and that the act should be disregarded. Tonight, we have had the final throw of the dice. The Secretary of State said that all those arguments mean nothing and that this is really a battle with the House of Lords. He said that, irrespective of the argument, this House must win. That is what we are faced with. We are to ignore the arguments and the issue's importance, and ensure that the Secretary of State and his macho Government win.

Mr. Damian Green: About once a fortnight, the House assembles to hear the Government marshall their arguments for this policy. Every time, their arguments become weaker, less plausible and more desperate. Tonight, we have seen the start of the Government's retreat.
The hon. Member for Falkirk, West (Mr. Canavan) said that it came as a surprise to him that the Minister was offering this half concession. It came as no surprise to me because, characteristically, a journalist had phoned me some hours ago saying that the Secretary of State would offer it and asking what our response would be. As ever, it had been leaked to the press hours before it came to the House.
We should pay tribute to hon. Members in the other place for their commendable insistence and for producing a reasonable and narrow amendment, which the Government would accept if they had any sense. I urge their Lordships to keep going until the Government's U-turn tonight becomes the headlong retreat that this policy deserves.
My right hon. Friend the Member for South Norfolk (Mr. MacGregor), a former Secretary of State for Education, honoured the Secretary of State by saying that he had two arguments. I suggest that basically he had one—that two anomalies are possible and that the Government are choosing the easier of them.


That argument does not bear the faintest examination. If one accepts, as the Government do, that the Scottish and English education systems are different, one could accept that the fee structure should be different. If one does not accept that, as the Government appear not to, two students doing identical courses will pay different fees. That is unfair, and if the Government do not recognise it, they are being wilfully ignorant and deliberately pig-headed.
Let us be generous to the Secretary of State. If there are two anomalies, which is the easiest to swallow? The Lords amendment would introduce fairness to Scottish university courses at a cost of £2 million. That is slightly more than three times the cost of the Lord Chancellor's wallpaper. We could pay for it out of the extra budget allocated to political advisers and spin doctors by the Government. We are told that the Scottish Office already has the £2 million in its estimates. Only the arrogance of the Secretary of State for Education and Employment stands between the Government and a welcome outbreak of common sense on this policy. [Interruption.] He has blustered away, and continues to do so from a sedentary position. I invite him to consider the effect that he has had on his colleagues in the other place.
We have already heard some of what Lord Shore of Stepney said, but it is worth repeating to the House another of his remarks. He said that his colleagues in the other place,
if they were allowed a free vote on the issue…would make quite clear their own feeling of repugnance at what is being proposed."—[Official Report, House of Lords, 7 July 1998; Vol. 591, c. 1103.]
He emphasised the word "repugnance" and he was right to do so. I hope that, this evening, there are once again some men and women of principle on the Government Benches who are prepared to vote according to their conscience.
The Secretary of State has not convinced Britain's students either. Tonight, I am happy to give a plug for The Guardian, which tomorrow will feature a full-page advertisement asking the crucial question:
Why should it cost £1,000 more to go to university in Scotland?
The advertisement has been placed by the National Union of Students, whose representatives tell me that a ring round enabled them to raise, in one afternoon and in voluntary contributions from member unions, the money to pay for the advertisement, such is the strength of feeling against the Government's policy in universities throughout the country. The NUS makes the key points:
We know it doesn't make sense. The House of Lords knows it doesn't make sense. Is it so hard to admit a simple error?
It is clearly too hard for the Labour Government and for the Secretary of State.
The NUS addresses itself directly to the Prime Minister, asking:
Please Prime Minister, listen to the pleas of students, lecturers, senior academics and the House of Lords. It's time to stop the destruction of Scottish universities and to stop your legislation as it stands. This Bill has caused confusion and uncertainty for all new students. It's time to think again.
I hope that, for once, Education Ministers will listen to those most involved in the process of education—the students who are going through it.
What arguments we have heard from those few Labour Back Benchers whom the Government have managed to get on their feet tonight have been straightforward, old-fashioned class warfare, in which vein they have been

encouraged by the Minister for Education and Industry, Scottish Office, the hon. Member for Cunninghame, North (Mr. Wilson). In a recent article for The Scotsman, he wrote:
the most conspicuous beneficiaries of the concession demanded by the Lords would be the products of private education outside Scotland who opted to pursue the four-year Scottish honours degree.
In new Labour, class warfare is the last refuge of the scoundrel. If they have nothing else left, they revert to their atavistic instincts.
In this case, to do so is not only cheap, but inappropriate. First, if the Minister has great objections to gilded youth from English public schools, what about gilded youth from Scottish public schools? For some reason, Fettes springs to mind. Secondly, and more to the point, what about the many students from Northern Ireland who choose to pursue higher education in Scotland? The president of the NUS in Scotland says that he has been
inundated with telephone calls from anxious students from Northern Ireland who wished to know if they could escape the £1,000 fee by gaining Scottish residency…Of 40 or so students we met, not one was from a 'privileged elite'. None were well able to afford fees, none were confident of missing out the first year of the four year degree, and most did not have that option.
That is what the students from Northern Ireland are saying. The Government's attack on them as a privileged elite is completely inappropriate.
Let us look at the real figures relating to the students about whom the Minister talks. I shall quote from another article by the Minister—I have been assiduous above and beyond the call of duty in reading all the Minister's words—in The Times Higher Educational Supplement.
He wrote:
Any student from a family with an income of below £16,500 will not pay any fees in any year if they come to Scotland.
The Minister might regard a £16,500 family income as enormous or as signifying fat cats, but I should point out that that is only just over £8,000 per parent. Are such people really fat cats? Are they worthy of the sneers of the Minister and those sitting behind him, desperate to do the Whips' bidding? No, they are exactly the people whom we should be encouraging into higher education, many of whom are the first from their families.
I agree that the Minister has made his case worse than he needed to, because the Government's own figures state that, if a student's gross family income is less than about £23,000 a year, the students and the student's family will not have to pay anything towards fees. The Government seem to regard any family on more than £11,500 per year per parent as a fat-cat family that does not deserve any help to get into higher education. That attitude is completely disgraceful.
Then there is the legal case. How much do the Government expect to pay in legal fees when the decision is challenged? It certainly will be challenged. The hon. Member for Linlithgow (Mr. Dalyell) mentioned advice from Edinburgh university. He will know that there is advice from many distinguished lawyers from Scotland and elsewhere that the European convention on human rights will leave the Government wide open to challenge. Quite apart from the wider issue of equity, they should not waste the education budget in this way.
The one interesting point that the Secretary of State made was that, in all cases, this House must prevail. That is the true arrogance of power. No revising Chamber in


any circumstance will be listened to by this Government, not even when, as in this case, it is supported by students, vice-chancellors, the Scottish universities, legal experts and every Opposition party. Not one Labour Back Bencher who is keenly involved in this issue has made any plausible case in favour of the policy. Where are the former presidents of the NUS when students need them?
The Secretary of State has tonight started the long retreat, but his offer of a review is completely inadequate. Why does he not offer Labour Members a free vote on this issue? That would be a proper concession. If he does not, we shall know that it is only the payroll vote, the ambitious-for-a-job vote and the Whips' lackeys' vote that are pushing through this absurd policy. We have won the intellectual argument and we have won the moral argument. I urge hon. Members on all sides to go into the Lobby against this miserable policy and save the Government from themselves.

Mr. Wilson: Perhaps I can help the hon. Member for Ashford (Mr. Green) with his intellectual argument because he obviously has difficulty distinguishing between £16,000 and £23,000. I shall help him because I know that he is anxious to secure the intellectual basis of his argument. One figure is net and the other is gross. I appreciate that those are difficult concepts.

Mr. Green: The Minister rightly says that £23,000 is the gross figure, and in doing so he is admitting that families with a gross income above that figure are the fat cats at whom he has sneered throughout the debate. Many families in Britain will find that interesting.

Mr. Wilson: I am sorry, but I shall have to help the hon. Gentleman again, because he intervened too quickly. I was about to point out that anyone with that minimum financial level for contributions would contribute not £1,000, as the hon. Gentleman implies, but £50. If even in all the dishonesty and bogus—I use the word advisedly—indignation of this debate, Opposition Members are suggesting that any student from the rest of the United Kingdom who has decided to follow a four-year course in Scotland would be deterred from doing so by the prospect of paying £50 over four years, the synthetic nature of their indignation becomes even more apparent.
I was very pleased to hear the hon. Member for Ashford welcoming, and singing a paean of praise to, the advertisement by the National Union of Students in The Guardian tomorrow. He will of course be aware that, under Tory higher education legislation, that advertisement would not have appeared because it would have been illegal. Perhaps the House can unite tonight at least in celebrating the freedom of speech granted by the Government against the will of the Tories.

Mr. Robert Maclennan: While the Minister is on the issue of the law, would he be good enough to answer the question put to him by the hon. Member for Linlithgow (Mr. Dalyell)? It is the Government's policy that, in the next Session of Parliament, after the Human Rights Bill has been enacted, the Minister responsible for a Bill will make declarations as to its compatibility with the European convention on

human rights. Has the Minister or the Secretary of State taken advice on that? In the Minister's opinion, is the proposal compatible with the convention?

Mr. Wilson: One of the endearing features of our mutual friend, the hon. Member for Linlithgow (Mr. Dalyell), is that he asks the same questions at each succeeding debate, even though he was given the answer at the previous one. The answer at the previous debate is the same as the answer at this debate: yes, of course the Government have taken advice, and the very firm advice is that what takes place within the jurisdiction is not a matter for the European courts, which are intent on achieving equity between member states. I find it extraordinary that the Liberal Democrats, of all people, and other pro-Europeans who preach the doctrine of subsidiarity and devolution, have such difficulty when it comes to practising subsidiarity and devolution.
One of the remarkable statements tonight came from the hon. Member for Havant (Mr. Willetts). In response to my hon. Friend the Member for Barking (Ms Hodge), who gave a constituency example, the hon. Gentleman leaped to his feet and said, "But there are two different systems in Scotland and in England." That was a belated flash of enlightenment. This whole issue is about matching within one state two distinct systems—the Scottish and English education systems.
Tory Members are all, by definition, from English constituencies. There are none from Scotland or Wales.

Mr. Ian Bruce: That is outrageous.

12 midnight

Mr. Wilson: It might be outrageous, but it is true. If it is outrageous—

Mr. Bruce: On a point of order, Mr. Deputy Speaker. Will you confirm that the usual channels have asked three colleagues to sit down to give that hon. Gentleman time to slander us?

Mr. Deputy Speaker: That is not a matter for the Chair.

Mr. Wilson: If the hon. Gentleman will tell me later how I slandered him, I shall try to develop the theme.
All the Tory Members who have spoken represent English constituents, yet none them has spoken up for his or her own constituents. I hope that their constituents have noted that. The irony is that, a fortnight ago, Tory Members were here speaking and voting in support of a diametrically different Lords' amendment, which would have given that concession not only to students from England attending Scottish universities, but to students from England doing four-year degree courses at all universities within the United Kingdom.
The plot has now changed completely. The Tories now say that English students attending English universities do not matter at all; the only ones who matter are those attending Scottish universities. We know that, on average, all the Tory Members who have spoken have 10 times


more constituents attending English universities on four-year degree courses than Scottish universities, so why do not they speak for their constituents?

Mr. Dalyell: rose—

Hon. Members: Give way.

Mr. Wilson: I shall give way to my hon. Friend in due course, not when Tory Members tell me to give way to him.
Thus, we have a remarkable discovery from the hon. Member for Havant that there are two different systems.

Several hon. Members: rose—

Mr. Wilson: We then had an equally remarkable statement from—[Interruption.]

Mr. Deputy Speaker: Order. It would help considerably if the Minister would say whether he intends to give way when people seek to intervene.

Mr. Nick St. Aubyn: On a point of order, Mr. Deputy Speaker. Is it in order for the Minister to mislead the House by confusing Master of Arts four-year degrees in England with Bachelor of Arts four-year degrees in Scotland?

Mr. Deputy Speaker: That, I think, is a matter for debate.

Mr. Wilson: I do not think it was much a point of order as a point of ignorance.
The second notable statement tonight was made by the hon. Member for Angus (Mr. Welsh). He gave us a real, live spending commitment on behalf of the Scottish National party. Those of us who follow the Scottish press know that, within the past week, it has been revealed that every previous spending commitment by the SNP has been wiped from its internet site, because it has realised that someone might start adding them up. Now a new internet site is being opened, and the hon. Member for Angus has made the first spending commitment.
Does the hon. Member for Angus, or any Opposition Member, know how much of the Scottish block goes towards subsidising, supporting, the presence of students from other parts of the United Kingdom at Scottish universities—something to which I have no objection? Does the hon. Gentleman know how much it is? Let me tell him. I assume that he has no idea that the net figure from the Scottish Office block spent on supporting students in the rest of the United Kingdom at Scottish universities is £65 million. That is not enough for the hon. Gentleman, so tonight the first spending commitment by the SNP is to commit it to spending, not £65 million, but £67 million, on supporting students from the rest of the UK at Scottish universities.

Mr. Dalyell: Will my hon. Friend give way?

Mr. Wilson: In due course.
The third remarkable statement tonight was made by my hon. Friend the Member for West Stirling.

Mr. Michael Connarty: Falkirk, West.

Mr. Wilson: I thought that I would never hear my hon. Friend the Member for Falkirk, West (Mr. Canavan) say, to support his argument, that "only 32 per cent." of students coming from England and the rest of the UK to Scotland come from independent schools. I believe that 32 per cent. is quite a high percentage. I would not mind—I say this to my hon. Friend in good spirit—if that figure, in my view a remarkable one, were a little lower. If there were a few more students from Bannockburn high school or St. Modan's academy, I would not regard that as the end of the world. However, that is a matter of judgment for my hon. Friend.
Perhaps most remarkable—

Mr. Wallace: Will the Minister give way?

Mr. Wilson: No.
Perhaps most remarkable of all, we heard the Liberal Democrat spokesman, the hon. Member for Bath (Mr. Foster), pray in aid Lord Shore of Stepney in support of his argument—Lord Shore of Stepney, who finds a passing anti-European bandwagon, jumps aboard it and then finds, extraordinarily, that his views are being quoted with approval by the hon. Member for Bath.

Mr. Dalyell: Lord Shore of Stepney was my good colleague for more than 30 years.
Returning to the constructive suggestion of my right hon. Friend the Secretary of State, may I ask what is the time scale for the review, and what are the terms of reference? If there is a test case, as undoubtedly there will be, might we wait until we have the result of the test case in law before any action is taken?

Mr. Wilson: I need hardly say that we intended answering, because my hon. Friend had already asked those questions, so of course I intended answering him. Let me turn to the subject of the proposed review. Let us be clear about this: the Government have always said that they would monitor the effects of the changes that are proposed—[HON. MEMBERS: "Ah."] Hang on. We are very pleased—from a position of strength and from confidence in our views, we are very pleased—

Mr. Andrew Robathan: Behind you.

Mr. Wilson: We are very pleased—[Interruption.]

Mr. Deputy Speaker: Order. The hon. Gentleman must be heard. There are far too many interventions, particularly from a sedentary position.

Mr. Wilson: Everyone knows the source of the Opposition's behaviour. I suppose that is all they have to console them.
The review will be formal and independently chaired. It will take place in the early part of next year, in time for the following academic year, so that the arguments that


have been adduced on both sides of the House and in the other place over several weeks can be assessed and their impact on applications considered.
If we are wrong, we shall accept that. We do not believe that we are wrong, and I do not sense one iota of such humility on the part of the Opposition. We believe that we are right, but, if matters are in doubt, we have a committee. The Scottish university principals, with whom I know that my hon. Friend the Member for Linlithgow is closely connected, will be represented on it, as will the Committee of Vice-Chancellors and Principals. It will have independent chairmanship at its head.
If the findings were that what we were doing had any of the effects claimed by the Opposition—something that we refute—we shall learn from that and act on it. That is an act of generosity and magnanimity on the Government's part, which I hope that my hon. Friend the Member for Linlithgow will support.
On the question of legal challenge, it depends on the nature of such a challenge and the stage at which it was made. As I have repeatedly told my hon. Friend, the advice that we have received is that that challenge would not be successful.

Mr. Wallace: When the Minister answered my right hon. Friend the Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan), he said that the legal advice that he had received was that the European rules did not apply to an internal arrangement within a member state, and that he was satisfied that the European Court of Justice would accept that.
However, as the Minister well knows, the purpose of the Human Rights Bill, which is before the House, is to incorporate the European convention on human rights into domestic law. Therefore, those matters will be justiciable in the British courts. What legal advice has he received with regard to any possible challenge under the European convention on human rights that would be heard before a British court?

Mr. Wilson: The advice is the same. There is no breach of human rights. I understand why Opposition Members and some in the House of Lords have tried to elevate the matter and make it something that it is not. A practical problem arises from the fact that, in the United Kingdom, there are two different educational systems with different school qualifications and honours degree courses of different lengths. That is what Lord Dearing's committee recommended and Sir Ron Garrick acknowledged. The recommendation was that we should take exactly the steps that we have taken. To try to leap from that to breaches of human rights is ridiculous. On that basis—

Mr. Peter Bottomley: On a point of order, Mr. Deputy Speaker. We have a genuine dilemma. Advice to Ministers is usually kept confidential. The advice of Law Officers to Ministers that what they are doing does not contradict the European convention is not advice that the House can normally obtain. In the present circumstances, the Government intend to incorporate the European law. Although the Minister said that it would be a purely domestic matter, it is accepted on both sides of the House and by Ministers that European students from outside the

UK would be treated differently from many students in this country. [Interruption.] If I may continue my point of order—

Mr. Deputy Speaker: Order. The hon. Gentleman is simply seeking to extend the debate. The point that he is raising is entirely a matter for debate.

Mr. Bottomley: rose—

Mr. Deputy Speaker: I have dealt with that point of order.

Mr. Bottomley: My point of order—

Mr. Deputy Speaker: I have dealt with that point of order.

Mr. Bottomley: Mr. Deputy Speaker, my point of order—

Mr. Deputy Speaker: Order. I have dealt with it.

Mr. Wilson: The hon. Gentleman can, as ever, be safely ignored.
We have done exactly what Dearing asked us to do. There is a practical problem, which we have addressed. We are offering an independent review of how we addressed it. We can do no more, we should do no more and, on that basis, I ask the House to support us.

Mr. Hayes: On a point of order, Mr. Deputy Speaker. As you know, I am a relatively new Member of the House. The record will show that the Minister used the words "ignorant" and "dishonest" during his tirade. Could you advise me on whether those words are parliamentary? If not, should he withdraw them?

Mr. Deputy Speaker: As far as I am aware, neither was applied to individual Members of this House.
I shall now put the Question.

Question put, That this House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 300, Noes 168.

Division No. 335]
[12.14 pm


AYES


Abbott, Ms Diane
Blunkett, Rt Hon David


Adams, Mrs Irene (Paisley N)
Borrow, David


Ainsworth, Robert (Cov'try NE)
Bradley, Keith (Withington)


Alexander, Douglas
Bradley, Peter (The Wrekin)


Allen, Graham
Bradshaw, Ben


Anderson, Donald (Swansea E)
Brinton, Mrs Helen


Armstrong, Ms Hilary
Brown, Rt Hon Nick (Newcastle E)


Atkins, Charlotte
Brown, Russell (Dumfries)


Banks, Tony
Browne, Desmond


Barron, Kevin
Burden, Richard


Battle, John
Byers, Stephen


Bayley, Hugh
Caborn, Richard


Beckett, Rt Hon Mrs Margaret
Campbell, Alan (Tynemouth)


Begg, Miss Anne
Campbell, Mrs Anne (C'bridge)


Bennett, Andrew F
Campbell-Savours, Dale


Benton, Joe
Cann, Jamie


Bermingham, Gerald
Caplin, Ivor


Best, Harold
Casale, Roger


Blears, Ms Hazel
Caton, Martin






Cawsey, Ian
Hain, Peter


Chapman, Ben (Wirral S)
Hall, Mike (Weaver Vale)


Chaytor, David
Hall, Patrick (Bedford)


Chisholm, Malcolm
Hamilton, Fabian (Leeds NE)


Clark, Rt Hon Dr David (S Shields)
Hanson, David


Clark, Paul (Gillingham)
Heal, Mrs Sylvia


Clarke, Charles (Norwich S)
Healey, John


Clarke, Rt Hon Tom (Coatbridge)
Henderson, Doug (Newcastle N)


Clelland, David
Henderson, Ivan (Harwich)


Clwyd, Ann
Heppell, John


Coaker, Vernon
Hesford, Stephen


Coffey, Ms Ann
Hewitt, Ms Patricia


Coleman, Iain
Hill, Keith


Colman, Tony
Hodge, Ms Margaret


Connarty, Michael
Hoey, Kate


Cook, Rt Hon Robin (Livingston)
Home Robertson, John


Cooper, Yvette
Hood, Jimmy


Corbett, Robin
Hoon, Geoffrey


Cousins, Jim
Hope, Phil


Cox, Tom
Howarth, Alan (Newport E)


Cranston, Ross
Howarth, George (Knowsley N)


Crausby, David
Howells, Dr Kim


Cryer, Mrs Ann (Keighley)
Hoyle, Lindsay


Cryer, John (Hornchurch)
Hughes, Ms Beverley (Stretford)


Cummings, John
Hughes, Kevin (Doncaster N)


Cunningham, Rt Hon Dr John (Copeland)
Humble, Mrs Joan



Hurst, Alan


Darvill, Keith
Hutton, John


Davey, Valerie (Bristol W)
Iddon, Dr Brian


Davidson, Ian
Illsley, Eric


Davies, Rt Hon Denzil (Llanelli)
Jackson, Helen (Hillsborough)


Davies, Rt Hon Ron (Caerphilly)
Jamieson, David


Dean, Mrs Janet
Johnson, Alan (Hull W & Hessle)


Denham, John
Johnson, Miss Melanie (Welwyn Hatfield)


Dewar, Rt Hon Donald



Dismore, Andrew
Jones, Barry (Alyn & Deeside)


Dobbin, Jim
Jones, Helen (Warrington N)


Dobson, Rt Hon Frank
Jones, Martyn (Clwyd S)


Donohoe, Brian H
Jowell, Ms Tessa


Doran, Frank
Kaufman, Rt Hon Gerald


Dowd, Jim
Keen, Alan (Feltham & Heston)


Drew, David
Keen, Ann (Brentford & Isleworth)


Dunwoody, Mrs Gwyneth
Kennedy, Jane (Wavertree)


Eagle, Angela (Wallasey)
Khabra, Piara S


Edwards, Huw
Kidney, David


Efford, Clive
Kilfoyle, Peter


Ellman, Mrs Louise
King, Andy (Rugby & Kenilworth)


Ennis, Jeff
Kingham, Ms Tess


Etherington, Bill
Kumar, Dr Ashok


Field, Rt Hon Frank
Ladyman, Dr Stephen


Fisher, Mark
Laxton, Bob


Flynn, Paul
Lepper, David


Follett, Barbara
Leslie, Christopher


Foster, Rt Hon Derek
Levitt, Tom


Foster, Michael Jabez (Hastings)
Liddell, Mrs Helen


Foster, Michael J (Worcester)
Lloyd, Tony (Manchester C)


Foulkes, George
Lock, David


Galbraith, Sam
Love, Andrew


Gapes, Mike
McAvoy, Thomas


Gardiner, Barry
McCabe, Steve


George, Bruce (Walsall S)
McCartney, Ian (Makerfield)


Gerrard, Neil
McDonagh, Siobhain


Gilroy, Mrs Linda
Macdonald, Calum


Godsiff, Roger
McFall, John


Goggins, Paul
McIsaac, Shona


Gordon, Mrs Eileen
McLeish, Henry


Griffiths, Jane (Reading E)
McNulty, Tony


Griffiths, Nigel (Edinburgh S)
MacShane, Denis


Griffiths, Win (Bridgend)
Mactaggart, Fiona


Grocott, Bruce
McWilliam, John


Grogan, John
Mallaber, Judy



Mandelson, Peter





Marsden, Gordon (Blackpool S)
Sawford, Phil


Marsden, Paul (Shrewsbury)
Sedgemore, Brian


Marshall, David (Shettleston)
Sheerman, Barry


Marshall, Jim (Leicester S)
Short, Rt Hon Clare


Marshall-Andrews, Robert
Singh, Marsha


Martlew, Eric
Smith, Rt Hon Andrew (Oxford E)


Maxton, John
Smith, Angela (Basildon)


Meacher, Rt Hon Michael
Smith, Rt Hon Chris (Islington S)


Merron, Gillian
Smith, Miss Geraldine (Morecambe & Lunesdale)


Michael, Alun



Milburn, Alan
Smith, John (Glamorgan)


Moffatt, Laura
Snape, Peter


Moonie, Dr Lewis
Soley, Clive


Morgan, Ms Julie (Cardiff N)
Southworth, Ms Helen


Morgan, Rhodri (Cardiff W)
Spellar, John


Morley, Elliot
Squire, Ms Rachel


Morris, Ms Estelle (B'ham Yardley)
Starkey, Dr Phyllis


Morris, Rt Hon John (Aberavon)
Steinberg, Gerry


Mudie, George
Stevenson, George


Mullin, Chris
Stewart, David (Inverness E)


Murphy, Denis (Wansbeck)
Stewart, Ian (Eccles)


Murphy, Jim (Eastwood)
Stinchcombe, Paul


Murphy, Paul (Torfaen)
Stoate, Dr Howard


O'Brien, Bill (Normanton)
Stott, Roger


O'Brien, Mike (N Warks)
Strang, Rt Hon Dr Gavin


O'Hara, Eddie
Straw, Rt Hon Jack


Olner, Bill
Stringer, Graham


O'Neill, Martin
Stuart, Ms Gisela


Organ, Mrs Diana
Sutcliffe, Gerry


Osborne, Ms Sandra
Taylor, Rt Hon Mrs Ann (Dewsbury)


Palmer, Dr Nick



Pearson, Ian
Temple-Morris, Peter


Pendry, Tom
Thomas, Gareth (Clwyd W)


Pickthall, Colin
Thomas, Gareth R (Harrow W)


Pike, Peter L
Tipping, Paddy


Plaskitt, James
Touhig, Don


Pond, Chris
Trickett, Jon


Pope, Greg
Truswell, Paul


Pound, Stephen
Turner, Dennis (Wolverh'ton SE)


Prentice, Ms Bridget (Lewisham E)
Turner, Dr Desmond (Kemptown)


Prentice, Gordon (Pendle)
Turner, Dr George (NW Norfolk)


Prosser, Gwyn
Twigg, Derek (Halton)


Purchase, Ken
Twigg, Stephen (Enfield)


Quin, Ms Joyce
Vaz, Keith


Quinn, Lawrie
Vis, Dr Rudi


Radice, Giles
Walley, Ms Joan


Rammell, Bill
Ward, Ms Claire


Rapson, Syd
Watts, David


Raynsford, Nick
White, Brian


Reed, Andrew (Loughborough)
Whitehead, Dr Alan


Reid, Dr John (Hamilton N)
Wicks, Malcolm


Robertson, Rt Hon George (Hamilton S)
Williams, Rt Hon Alan (Swansea W)


Roche, Mrs Barbara
Williams, Alan W (E Carmarthen)


Rogers, Allan
Wilson, Brian


Rooker, Jeff
Winnick, David



Winterton, Ms Rosie (Doncaster C)


Rooney, Terry
Woolas, Phil


Ross, Ernie (Dundee W)
Worthington, Tony


Rowlands, Ted
Wray, James


Ruane, Chris
Wright, Anthony D (Gt Yarmouth)


Ruddock, Ms Joan



Russell, Ms Christine (Chester)
Tellers for the Ayes:


Salter, Martin
Janet Anderson and


Savidge, Malcolm
Mr. Clive Betts.


NOES


Ainsworth, Peter (E Surrey)
Blunt, Crispin


Amess, David
Boswell, Tim


Arbuthnot, James
Bottomley, Peter (Worthing W)


Baker, Norman
Brady, Graham


Baldry, Tony
Brake, Tom


Ballard, Jackie
Brand, Dr Peter


Beith, Rt Hon A J
Brazier, Julian


Bercow, John
Breed, Colin


Beresford, Sir Paul
Brooke, Rt Hon Peter






Browning, Mrs Angela
Lewis, Dr Julian (New Forest E)


Bruce, Ian (S Dorset)
Lidington, David


Bruce, Malcolm (Gordon)
Lilley, Rt Hon Peter


Burnett, John
Livsey, Richard


Burstow, Paul
Lloyd, Rt Hon Sir Peter (Fareham)


Butterfill, John
Llwyd, Elfyn


Cable, Dr Vincent
Loughton, Tim


Campbell, Menzies (NE Fife)
MacGregor, Rt Hon John


Chidgey, David
McIntosh, Miss Anne


Chope, Christopher
MacKay, Andrew


Clark, Rt Hon Alan (Kensington)
Maclean, Rt Hon David


Clarke, Rt Hon Kenneth (Rushcliffe)
Maclennan, Rt Hon Robert



McLoughlin, Patrick


Clifton-Brown, Geoffrey
Madel, Sir David


Collins, Tim
Malins, Humfrey


Cotter, Brian
Maples, John


Cran, James
Mates, Michael


Cunningham, Ms Roseanna (Perth)
Maude, Rt Hon Francis



Mawhinney, Rt Hon Sir Brian



May, Mrs Theresa


Curry, Rt Hon David
Michie, Mrs Ray (Argyll & Bute)


Davies, Quentin (Grantham)
Moore, Michael


Davis, Rt Hon David (Haltemprice)
Morgan, Alasdair (Galloway)


Day, Stephen
Moss, Malcolm


Duncan, Alan
Nicholls, Patrick


Duncan Smith, Iain
Oaten, Mark


Emery, Rt Hon Sir Peter
Öpik, Lembit


Evans, Nigel
Ottaway, Richard


Ewing, Mrs Margaret
Paice, James


Faber, David
Paterson, Owen


Fallon, Michael
Pickles, Eric


Fearn, Ronnie
Prior, David


Flight, Howard
Randall, John


Forth, Rt Hon Eric
Redwood, Rt Hon John


Foster, Don (Bath)
Rendel, David


Garnier, Edward
Robathan, Andrew


George, Andrew (St Ives)
Roe, Mrs Marion (Broxbourne)


Gibb, Nick
Rowe, Andrew (Faversham)


Gill, Christopher
Ruffley, David


Gillan, Mrs Cheryl
Russell, Bob (Colchester)



St Aubyn, Nick


Gorman, Mrs Teresa
Salmond, Alex


Gorrie, Donald
Sanders, Adrian


Gray, James
Sayeed, Jonathan


Green, Damian
Simpson, Keith (Mid-Norfolk)


Greenway, John
Smith, Sir Robert (W Ab'd'ns)


Grieve, Dominic
Smyth, Rev Martin (Belfast S)


Hamilton, Rt Hon Sir Archie
Soames, Nicholas


Hammond, Philip
Spelman, Mrs Caroline


Hancock, Mike
Spicer, Sir Michael


Harris, Dr Evan
Stanley, Rt Hon Sir John


Harvey, Nick
Steen, Anthony


Hawkins, Nick
Streeter, Gary


Hayes, John
Stunell, Andrew


Heath, David (Somerton & Frome)
Swinney, John


Heathcoat-Amory, Rt Hon David
Syms, Robert


Howard, Rt Hon Michael
Tapsell, Sir Peter


Hughes, Simon (Southwark N)
Taylor, Rt Hon John D (Strangford)


Hunter, Andrew
Tonge, Dr Jenny


Jack, Rt Hon Michael
Tredinnick, David


Jenkin, Bernard
Trend, Michael



Tyler, Paul


Johnson Smith, Rt Hon Sir Geoffrey
Tyrie, Andrew


Jones, Nigel (Cheltenham)
Wallace, James


Keetch, Paul
Walter, Robert



Wardle, Charles


Kennedy, Charles (Ross Skye)
Waterson, Nigel


Key, Robert
Webb, Steve


King, Rt Hon Tom Bridgwater)
Wells, Bowen


Kirkbride, Miss Julie
Welsh, Andrew


Kirkwood, Archy
Whittingdale, John


Laing, Mrs Eleanor
Wilkinson, John


Lait, Mrs Jacqui
Willetts, David


Lansley, Andrew
Willis, Phil


Leigh, Edward
Wilshire, David


Letwin, Oliver
Winterton, Mrs Ann (Congleton)





Winterton, Nicholas (Macclesfield)
Tellers for the Noes:


Woodward, Shaun



Yeo, Tim
Mr. John M. Taylor and


Young, Rt Hon Sir George
Mr. Edward Davey.

Question accordingly agreed to.

Resolved,
That this House disagrees to the Amendment proposed by the Lords in lieu of the words left out of the Bill in page 22, lines 31 to 39.

Lords amendment disagreed to.

Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to the amendment proposed by the Lords in lieu of the words left out of the Bill in page 22, lines 31 to 39: Mr. Damian Green, Mr. David Jamieson, Mr. Tony McNulty, Mr. Phil Willis and Mr. Brian Wilson; Three to be the quorum of the Committee.—[Mr. Jamieson.]

To withdraw immediately.

Reasons for disagreeing to the Lords amendment reported, and agreed to; to be communicated to the Lords.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

EC PRELIMINARY DRAFT BUDGET FOR 1999

That this House takes note of European Community Document Nos. COM(98)300, the Preliminary Draft Budget of the European Communities for 1999, and SEC(98)800, the Commission's Overview of the Preliminary Draft Budget; and supports the Government's efforts to maintain budget discipline in the Community.—[Mr. Pope.]

Question agreed to.

DELEGATED LEGISLATION

Mr. Deputy Speaker (Mr. Michael Lord): With permission, I shall put together the motions relating to delegated legislation.

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

INCOME TAX

That an humble Address be presented to Her Majesty, praying that the draft Double Taxation Relief (Taxes on Income) (Oman) Order 1998 be made in the form of the draft laid before this House on 2nd June.

That an humble Address be presented to Her Majesty, praying that the draft Double Taxation Relief (Air Transport) (Hong Kong) Order 1998 be made in the form of the draft laid before this House on 2nd June.

That an humble Address be presented to Her Majesty, praying that the draft Double Taxation Relief (Taxes on Income) (Kazakhstan) Order 1998 be made in the form of the draft laid before this House on 2nd June.—[Mr. Pope.]

Question agreed to.

PETITION

Badgers

Mr. Roger Gale: I have the honour to present a petition co-ordinated by the National Federation of Badger Groups, representing 50,000 citizens of the United Kingdom. The petition reads:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of the Citizens of the United Kingdom sheweth;—

1) That the use of snares to trap animals is indiscriminate.
2) That the use of snares causes great suffering and stress to all animals.


Wherefore your petitioners pray that your Honourable House will take all such measures as lie within your power

1) To abolish all snares.
2) To protect all animals from inhumane forms of trapping. And your petitioners, as in duty bound, will ever pray.


The use of snares is vile, inhumane and indiscriminate, and the petition has my full support.

To lie upon the Table.

Back Pain

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

Mrs. Eileen Gordon: Thank you, Mr. Deputy Speaker, for the opportunity to discuss back pain, an issue that affects many people's lives.
I am lucky in that, to date, I have not suffered back pain. However, since becoming a Member of Parliament, I have gained empathy for people who do. I had not realised before my election that Members of Parliament are like nomads: they seem to spend a lot of time moving from place to place, carrying in bags what feels like everything they own. As I travel from my Westminster office, to my constituency office, to the House of Commons Library, loaded down with paperwork, I am conscious that my neck and shoulders ache at the end of the day. Indeed, shoulder and neck problems are among the commonest problems presented to the occupational health unit in the Palace of Westminster.
Why is it that receptions that we have to attend seem to entail standing around for a couple of hours when every bone in our body tells us that we want to sit down? Then there are late-night sittings, when I try to rest between votes in armchairs that are totally unsuitable. Such sittings may be part of democracy—although not for much longer, I hope—but they are not much good for the back, so, although I have been lucky so far to have avoided back pain, I am not sure that it will not catch up with me later. Therefore, I come to this debate not as an expert, but just as someone who would like to share a few ideas and observations.
When I was elected last year, one of the first events to which I was invited was a back pain awareness day organised by Peter Moore of the Havering branch of the National Back Pain Association. It was at that awareness day that I became aware of the scale of the problem, and of how many people are affected by back pain. The association issued "back facts", which show that there were some 117.56 million days of certified incapacity in 1995–96, 30,715 work-related back injuries, 33,000 work-related accidents and 500,000 work-related illnesses. The cost to industry is at least £5.1 billion, and to the national health service £480 million. The occupations with the highest incidence are, as hon. Members might expect, nursing, agriculture and construction.
The Manual Handling Operations Regulations 1992, designed to protect adults in the workplace, assume that loads of up to 20 kg that are held against the body will not be carried more than 10 m without rest. I want to talk about a group of people who are not covered by any regulations: our children.
There has been a worrying increase in the incidence of back pain among young people. From studies, it looks as if many of the causes can be prevented. One such cause is the carrying of heavy school bags. When I was at school, which admittedly was a long time ago, children had their own desks where they could leave books and equipment. That is no longer the case in the vast majority of secondary schools. Children now seem to carry their whole lives around with them.
I remember my two teenage children staggering out of the house with bags that I could not even lift, plus, in my daughter's case, a cello. I felt sorry for them, but now I know that they could have been doing real damage to their still growing, immature spines.
Some children carry around 13 per cent. of their body weight. In some cases, children carry 60 per cent. of their body weight—sometimes it is as much as 25 kg, or around three stone. The highest risk group are 11 to 12-year-olds carrying up to 25 per cent. of body weight. Forty-four per cent. of children carry those heavy weights for up to the 25 minutes that it takes them to walk to school, as well as carrying them around school.
Children carry not only heavy weights but uneven weights. They tend to carry their bags on one shoulder, rather than distributing the weight more evenly by using both straps on a rucksack-type bag. Fashion has a lot to do with that—although some schools do not permit bags to be placed on both shoulders, as swinging a rucksack on to one's back could be hazardous. However, it is an even greater health hazard to carry an unbalanced weight. Schools must be made to realise that fact and the importance of wearing bags properly.
Lockers in schools would help, as children would then at least not have to carry their bags around all day. However, only 40 per cent. of secondary schools have a locker available for each child in the school. I am proud to say that the school in which I serve as a governor—Marshall's park school, in Romford—provides a locker for each child, and, just as important, encourages students to use them. Schools that do not offer such a facility should seriously consider doing so.
Perhaps parent-teacher associations could take locker provision on as a project. However, I think that lockers may be one matter on which the Government should consider regulating. Locker provision for new schools could be incorporated at the planning stage, by ensuring that corridors are built sufficiently wide to accommodate lockers.
Young people think themselves immortal, and really do not think about what will happen in 20 or 30 years—and why should they? It is up to us as adults to build a framework that will prevent injury to our young people, either now or in the future. I believe that the Government should be considering regulations to protect our children that are similar to those protecting adults. Health and safety regulations, quite rightly, are very strict in trying to protect people at work. Our young people deserve no less than to have regulations determining maximum weights that should be carried. Some countries already do so.
The National Back Pain Association recommends that the ideal bag weight objective is 10 per cent. of body weight. The association is also conducting trials on a specially designed bag. The challenge will be to make such a bag desirable to young people. I hope that head teachers and education authorities will support such initiatives to lighten the load of our students.
Let us make no mistake about it: back pain can dominate and debilitate people, making their lives a misery. Chronic or severe pain can lead to severe depression and an inability to lead a normal life.
Back pain treatments were mediaeval—in which people had to lie on a board for weeks on end and rely on pain killers. My husband had to undergo such treatment, after his back seized up as he was running for a train. Although his pain was obvious, he was given no real advice on how to deal with it, or on rehabilitation. Thank goodness the old treatments are now discredited. For most back pain similar to that which my husband suffered, two days in bed is considered better than seven days—or even weeks—in bed. Longer spells in bed will cause back muscles to stiffen and lose strength.
It is now recognised that self-care techniques, such as pacing—by performing tasks in a measured and controlled fashion, without overdoing or straining—stretching and relaxation, can greatly help with back problems.
There are very positive developments in treating back pain. One excellent example is the input pain management programme at St. Thomas's hospital. After careful assessment, sufferers are equipped with techniques that help them to live with their condition, build up stamina and improve mobility. Many people disabled with back pain have been able with the programme's help to return to work. One person who was helped by the scheme said:
Before, I was lucky to be able to walk for 10 minutes without pain. I have just completed my first one-hour walk and felt that I could have gone on longer.
I have mentioned St. Thomas's programme specifically not only because it was drawn to my attention but because I have read the excellent advice that it provides to its general practitioners. Moreover, it is only across the river from this place. I am sure that there are many other examples of pain management units, but I understand, however, that provision is patchy throughout the country. I ask my hon. Friend the Minister to look at any similar schemes around the country, and to spread best practice so that equality of treatment is available.
The British Medical Association in its "Home Healthcare Guide", issued to celebrate the 50th anniversary of the national health service, gives positive advice on back and neck pain, emphasising relaxation exercises and the need to exercise to strengthen stomach, neck and side muscles.
Awareness, support and information are important. The Havering branch of the National Back Pain Association has hundreds of members. For those who miss the meetings, a video is available. For those depressed by chronic pain, there is a listening ear service, and for those who want more information there is a library and a newsletter. It is even on the internet.
In the past, too many people with chronic pain felt isolated. Support groups take away that feeling. Nothing is worse than feeling that one is the only person with a particular problem. Again, I thank Peter Moore for his excellent work, and for staying here tonight and listening to the debate. He has been there himself and still suffers chronic back pain, but he has learnt to manage his pain, and he now works tirelessly to help others overcome their problems. Pain management, with rehabilitation and support, is the ideal combination for dealing with the problem.
As I said, back pain is costing people a great deal in pain and loss of quality of life. It is also costing the country billions of pounds in lost production and health care.
There are ways in which back pain can be prevented, especially for young people, for whom serious problems that may not be evident for many years are starting now. I encourage my hon. Friend the Minister to look at the whole area of prevention, in partnership with the Department for Education and Employment. To help those suffering with back pain, my hon. Friend should encourage hospitals to set up pain management and rehabilitation units, and spread best practice.
We are not talking about a few people here. Some 60 per cent. of adults suffer back problems annually, and 30 per cent. of adults become chronic sufferers. National Back Pain Week begins on 5 October, so it is appropriate that we have managed to debate the matter before the summer recess. The National Back Pain Association will be holding many activities, and the specially designed school bags will be available. Hopefully, all right hon. and hon. Members will take part in local awareness activities during the week, especially with local secondary schools.
We all lead much more sedentary lives now. We tend to sit in front of the computer or television for long periods. Badly designed furniture increases the risk of back pain. That is true in schools, too. The need to keep up with technology leads to the ever-present demands to buy computers and software, but all too often children are sitting on badly designed chairs and working on unsuitable desks, not designed for computer work. Evolution has adapted us for many things, but it has not kept up with our soft lives—moving from soft beds to cars to desks and back again.
I have highlighted only a few issues tonight, but I should be glad to provide any further information I can to my hon. Friend, whom I thank for listening so intently to me at such a late hour. Back pain is a big issue, and one that I am sure the Government take seriously.

The Minister for Public Health (Ms Tessa Jowell): I congratulate my hon. Friend the Member for Romford (Mrs. Gordon) on introducing tonight's debate, and on the extremely eloquent and informed way in which she addressed the issue. She highlighted the problem of children and young people with back pain. I appreciate, as do other hon. Members, how debilitating back pain can be, and the effect that it can have not only on the general health of sufferers, but on their social, economic and psychological well-being as well as that of their families.
As my hon. Friend said, back pain can be costly to employers and, if it is not properly treated, to the national health service. There are, however, fairly strict regulations for adult workers. It is the responsibility of the Health and Safety Executive to formulate guidance and to oversee the implementation of European and United Kingdom regulations.
We do not think it necessary to legislate for how people should go about their everyday tasks or how schoolchildren should carry their books or other possessions. However, I take the point, which my hon. Friend made so forcefully, that we need to take account of the damage that many young people may be inflicting on themselves. Certainly we should do well to remember that the child with back pain today may be the adult with a chronic disability tomorrow.
Nearly a third of the population will suffer some back pain at some time in the year; possibly half that number will consult their general practitioners about it. For a

small proportion—about 3 to 5 per cent. —of people, back pain will be a chronic condition, which will, in many cases, prevent them from working and require them to rely on disability benefits or to claim compensation through their employers or insurance companies, with all the difficulties that that involves.
Back pain in adults can be serious, although it is generally short-lived. There are clinical guidelines on treatment and programmes of rehabilitation. Moreover, there are a number of research projects and, thanks to organisations such as the National Back Pain Association, to which my hon. Friend paid tribute, there are good sources of advice and information, including information on self-help, as she made clear.
Back pain in children brings with it different considerations, such as the effect it can have on educational development and the carry-over of problems into adulthood. The Department of Health has noted reports of an increasing number of children being referred for treatment of back pain. Although the design and weight of school bags may play a part in that, other factors—such as physical fitness, good posture and healthy life styles—are also important.
The reported increase in back pain is a matter of considerable concern for both the Department of Health and the Department for Education and Employment. For children to realise their full educational potential, they must be both physically fit and mentally receptive, as both Departments fully recognise—we have been working together on a number of initiatives aimed at achieving precisely that objective in schools.
The Department for Education and Employment's White Paper "Excellence in schools" identified the importance of a good education for all children, especially those who were likely already to be disadvantaged because of their social background. The Government's consultation paper "Our Healthier Nation" has continued that theme, stressing the importance of the link between educational achievement and some of the social problems that teenagers, in particular, may face.
When the Under-Secretary of State for Education and Employment, my hon. Friend the Member for Birmingham, Yardley (Ms Morris), and I launched the initiative on healthy schools in May, we were both aware of the need to promote better recognition of the link between health and education and to encourage schools to lay down foundations on which children could go on to lead healthy, active and productive adult lives. The problem of back pain is only one aspect of that, although it is important and of growing significance.
I fully appreciate my hon. Friend's concerns about the problems that pupils may experience in carrying heavy bags and the possible effects in later life. The National Back Pain Association has focused on the problem of heavy school bags and will, I understand, promote the sale of a specially designed school bag later this year.
We are pleased to welcome that practical development, but we should remember that some children's decisions are defined by fashion and culture rather than any thought for their future health. Many children regard the odd twinge as a price worth paying to seem to their friends to be at the leading edge of fashion. There are clear parallels with parental battles over sensible footwear—not something to which a fashion-conscious 13-year-old will give a great deal of thought.
There may be a number of other possible solutions, such as having lockers, desks, or at least safe places available for children to store their books in school; or limiting children's need to move to different classrooms during the day. Those are matters for the school authorities, which must also take into account other factors, such as security and practicability. It is also for the school to plan its timetable and decide where and when lessons take place.
It is important not to look at the problem of heavy school bags in isolation. The general health of children and young people will affect their susceptibility to back pain and other disorders, as will posture and life style.
Although we need to recognise the prevalence of, and to do something about, low back pain in both adults and children, we also need to put it in the wider context of public health. Exercise and physical activity are acknowledged to play an important part in maintaining good health and helping to prevent not only serious conditions such as coronary heart disease or stroke, but minor disabilities that can cause distress and affect a person's mental well-being.
In children and young people, in particular, physical activity is known to have multiple health benefits. Activities such as walking or cycling can improve the growth and development of bone and muscle, control blood pressure and promote the development of a healthy body weight.
We in the Department of Health are not simply preaching about those benefits. Indeed, preaching is likely to guarantee that the message will fall on deaf ears. We are working with the Department of the Environment, Transport and the Regions and the Department for Education and Employment to promote safe cycling and walking to and from school. We contributed to the DETR's White Paper on integrated transport, which aims to develop active modes of transport through, for example, dedicated cycle paths and better facilities for cycle parking at schools.
Last year, we funded through the Health Advisory Council a symposium of experts known as "Young and Active", which brought together specialists to agree new recommendations on the amount and type of physical activity that should be encouraged in order to benefit children's health. We have asked the council to produce recommendations that will help to inform future departmental strategy on physical activity and young people. I hope to be able to launch a report later this year.
That may seem to stray from the problem of children carrying around heavy bags of books, but I hope that hon. Members will recognise the need to see that problem in the wider context of healthy life styles for children and adults. People who are active tend to be those who were

active in childhood, and children with prolonged back pain are likely to find the condition recurring when they are older. We must not forget the beneficial effect that physical activity can have on low self-esteem, particularly for children from disadvantaged groups and those with learning difficulties.
My hon. Friend's suggestion that legislation should limit the weight of children's bags is not likely to be the most practical or the best way to tackle the problem. Guidance to schools, parents and children is simpler and far more likely to be effective. The National Back Pain Association has produced guidelines for head teachers, and those have been welcomed. I should be happy to arrange for officials to meet the NBPA and other interested parties to discuss the most helpful way forward. That should be seen in the broad context of the Government's healthy schools initiative.
The Government fully recognise the seriousness of back pain. The Clinical Standards Advisory Group made a major advance in a 1994 report that highlighted the condition and made practical recommendations. One was that rehabilitation programmes should be set up for patients who had had back pain for more than three months. The report put particular emphasis on the need for an active rehabilitation programme provided in a multi-disciplinary setting with access to a wide range of professional skills and close links to other services and organisations. As well as medical supervision and physiotherapy, a programme might include education and training in back function, and the teaching of the type of relaxation and coping strategies referred to by my hon. Friend.
The findings of the advisory group were welcomed by both the professions concerned and the Department of Health. The report was distributed widely within the NHS, so that health authorities and trusts could consider action to improve services for people with back pain. As part of our plans to develop the new NHS, there will be greater emphasis on treatment and rehabilitation in the community. That should mean that most people with back pain can be seen earlier and closer to home, without the need for hospital treatment.
Back pain is a major cause of absence from work in the NHS itself. Methods of treatment must improve, but so must occupational health policies on the welfare and well-being of NHS staff. I believe that there is now more awareness of the need to give greater emphasis to promoting good back care and preventing avoidable injuries. There is a clear incentive for employers to reduce back injuries—the resultant days off work, and risks of litigation.
I reiterate my thanks to my hon. Friend for raising an important issue and for discussing prevention of injuries and the health of children.

Question put and agreed to.

Adjourned accordingly at two minutes to One o'clock.